Global Textile All., Inc. v. TDI Worldwide, LLC, 2018 NCBC 116.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF GUILFORD 17 CVS 7304
GLOBAL TEXTILE ALLIANCE, INC.,
Plaintiff,
v.
TDI WORLDWIDE, LLC, DOLVEN ENTERPRISES, INC., TIMOTHY DOLAN, individually and in his capacity as an officer, shareholder ORDER AND OPINION ON and director of Dolven Enterprises, DEFENDANTS GFY INDUSTRIES Inc. and an officer and owner of TDI LIMITED, GFY, LIMITADA de Worldwide, LLC; JAMES DOLAN, CAPITAL VARIABLE, GFY individually and in his capacity as an officer, shareholder and director of COOPERATIVE, U.A. and GFY SH’S Dolven Enterprises, Inc., STEVEN 12(b)(2) MOTION TO DISMISS GRAVEN, individually and in his SECOND AMENDED COMPLAINT capacity as an officer, shareholder AND PLAINTIFF’S MOTIONS TO and director of Dolven Enterprises, STRIKE Inc., RYAN GRAVEN, individually and in his capacity as an officer, shareholder and director of Dolven Enterprises, Inc., GARRETT GRAVEN, individually, GFY INDUSTRIES LIMITED, GFY, LIMITADA de CAPITAL VARIABLE, GFY COOPERATIVE, U.A., and 上海 冠沣源贸易有限公司 a/k/a GFY SH,
Defendants.
THIS MATTER comes before the Court on Defendants Ryan Graven, Dolven
Enterprises, Inc., GFY Industries Limited, GFY, Limitada de Capital Variable, GFY
Cooperative, U.A., and GFY SH’s Motion to Dismiss Second Amended Complaint.
(Defs.’ Mot. Dismiss Sec. Am. Compl., ECF No. 288.) The Motion to Dismiss Second
Amended Complaint seeks dismissal of Defendants on two distinct grounds: (1) under
North Carolina Rule of Civil Procedure 12(b)(2) (hereinafter “Rule”) based on lack of
personal jurisdiction over GFY Industries Limited, GFY, Limitada de Capital Variable, GFY Cooperative, U.A., and GFY SH (collectively, “GFY Defendants”), and
(2) under Rule 12(b)(6) for failure to state claims as to all Defendants.1 Defendants
sought, and the Court granted, leave for the GFY Defendants to separately file a brief
in support of their 12(b)(2) motion to dismiss for lack of personal jurisdiction (“GFY
Defendants’ Motion”), and for all Defendants to file a single, consolidated brief in
support of their 12(b)(6) motions to dismiss. (Order, ECF No. 163.) Accordingly, this
Order and Opinion addresses only the GFY Defendants’ Motion. The Defendants’
motion to dismiss under Rule 12(b)(6) will be addressed in a separate order of this
Court.
THE COURT, having considered the Motion, the briefs in support of and in
opposition to the Motion, the arguments of counsel at the hearing, and other
appropriate matters of record, concludes that the Motion should be GRANTED, in
part, and DENIED, in part in the manner and for the reasons set forth below.
Hagan Barrett & Langley PLLC, by J. Alexander S. Barrett and Kurt A. Seeber for Plaintiff Global Textile Alliance, Inc.
K&L Gates LLP, by A. Lee Hogewood III, John R. Gardner, and Matthew T. Houston for Defendants Dolven Enterprises, Inc., Ryan Graven, GFY Industries Limited, GFY Limitada de Capital Variable, GFY Cooperative, U.A., and GFY Shanghai.
Morningstar Law Group, by Shannon R. Joseph and Jeffrey L. Roether for Defendant Garrett Graven.
1 In connection with the GFY Defendants’ Motion, Plaintiff filed two separate motions to
strike various documents filed by GFY Defendants in support of their motion to dismiss. (“Motions to Strike”; ECF Nos. 304, 339.) GFY Defendants filed briefs in opposition to the Motions to Strike, (ECF Nos. 334, 349), and Plaintiff filed replies. (ECF Nos. 339, 350). The Court has thoroughly considered the Motions to Strike, and concludes, in its discretion, that they should be DENIED. Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Eric M. David, Brian C. Fork, and Shepard D. O’Connell for Defendant James Dolan.
James, McElroy & Diehl, P.A., by Fred B. Monroe and Jennifer M. Houti for Defendants TDI Worldwide, LLC and Timothy Dolan.
Ellis & Winters LLP, by Jonathan A. Berkelhammer, Steven A. Scoggan, and Scottie Forbes Lee for Defendant Steven Graven.
McGuire, Judge.
1. In considering a 12(b)(2) Motion, the Court makes its findings of fact
based on a “review of [Plaintiff’s Second Amended Complaint (“SAC”)2], the parties’
exhibits, the submitted depositions and affidavits, other appropriate evidence of
record, and the arguments of counsel at the hearings on the 12(b)(2) Motion . . . .”
AYM Techs., LLC v. Rodgers, 2018 NCBC LEXIS 14, at *7 (N.C. Super. Ct. Feb. 9,
2018). The Court accepts Plaintiff’s allegations as true, to the extent they are
uncontested by the affidavits and other evidence presented by Defendants. See
Herrera v. Charlotte Sch. of Law, LLC, 2018 NCBC LEXIS 15, at *10 (N.C. Super. Ct.
Feb. 14, 2018).
I. FINDINGS OF FACT AND PROCEDURAL BACKGROUND
2. Plaintiff Global Textile Alliance, Inc. (“Plaintiff”) is a North Carolina
corporation with its principal place of business in Rockingham County, North
Carolina. Plaintiff is in the business of providing fabrics, mattress ticking, covers,
2 (Sec. Am. Compl., ECF No. 261.) and other textiles to the bedding, upholstery, and home furnishings industries. (Sec.
Am. Compl., ECF No. 261, at ¶ 1.)
3. Plaintiff was founded in 2001 by Luc Tack (“Tack”), a Belgian
entrepreneur, and Defendants Timothy Dolan (“Timothy”) and Steven Graven
(“Steven”) “for the purpose of providing fabric sourcing alternatives to furniture and
bedding manufacturers in the United States.” (Id. at ¶¶ 20–21.) Tack provided the
funding to start Plaintiff, and Timothy incorporated Plaintiff and transferred all of
its shares to Tack in the fall of 2001. (Id. at ¶ 21.) Since that time, Tack has been
the sole shareholder of Plaintiff. (Id.) Until April 2016, Timothy served as Plaintiff’s
CEO and as a director, and Steven served as Plaintiff’s Executive Vice President and
as a director. (Id. at ¶¶ 4, 6.)
4. Defendant Ryan Graven (“Ryan”) is a citizen and resident of North
Carolina. (R. Graven Aff. ISO MTD, ECF No. 289.1, at ¶ 1.) Ryan is the son of Steven
and a former employee of Plaintiff. (ECF No. 261, at ¶ 7.) Ryan served as the legal
representative and head operating manager of Plaintiff’s operations in China. (Id.)
Ryan is also the founder, or one of the founders, of each of GFY Defendants. (ECF
No. 289.1, at ¶ 3.)
5. Defendant Dolven Enterprises, Inc. (“Dolven”) is a North Carolina
corporation with its principal place of business in Raleigh, North Carolina. (ECF No.
261, at ¶ 3; ECF No. 289.1, at ¶¶ 22–23.) Dolven is owned in equal twenty-five
percent shares by Timothy, Steven, Ryan, and James Dolan (“James”). (ECF No. 261,
at ¶ 3.) Ryan is the President and CEO of Dolven. (Id. at ¶ 7; ECF No. 289.1, at ¶ 2.) Dolven is engaged in the business of sourcing fabrics, cutting and sewing fabrics, and
providing other services in the bedding and fabric industries in direct competition
with Plaintiff. (ECF No. 261, at ¶ 3.)
6. Defendant GFY Industries Limited (“GFY”) is a Chinese company and
has its principal place of business in Hong Kong, China. (Id. at ¶ 9; ECF No. 289.1,
at ¶ 13.) Timothy, Steven, Ryan, and James founded GFY in 2009. (ECF No. 261, at
¶ 48.) Ryan serves as the director of GFY. (ECF No. 289.1, at ¶ 9.) GFY provides
Plaintiff’s customers with “a resource for cut-and-sew operations and supply chain
management in China.” (Id. at ¶ 14.) Plaintiff alleges that GFY is “managed and
controlled by Dolven,” (ECF No. 261, at ¶ 9), but GFY Defendants have produced
evidence that GFY’s day-to-day operations are managed by individual’s residing in
China. (ECF 289.1, at ¶¶ 10–11.) GFY Defendants also produced evidence that GFY
does not purchase products in, deliver products to, provide services in, advertise in,
pay taxes in, or otherwise have tangible assets in, North Carolina. (Id. at ¶¶ 15–21.)
Plaintiff, however, claims GFY engaged in purchase and sale transactions with
Plaintiff in North Carolina. (Kim Thompson Aff.; ECF No. 235.1. at ¶¶ 5–8.)
7. Defendant GFY Cooperative, U.A. (“GFY Coop”) is a holding company
that was formed in the Netherlands. (ECF No. 261, at ¶ 11; ECF No. 289.1, at ¶ 7.)
Documents GFY Coop is required to file in the Netherlands list the company’s
principal place of business as 1317 Transport Drive, Raleigh, NC, 27603. (D. De
Waard Aff., ECF No. 235.3, at ¶ 8.) Dolven is the majority shareholder in GFY Coop,
and non-party R33183G, LLC is the minority shareholder. (ECF No. 289.1, at ¶¶ 5– 6.) As a holding company, GFY Coop has no employees, no direct operating functions,
and no clients or customers. (Id. at ¶¶ 24–28.) GFY Coop maintains a bank account
in the United States, but has no tangible assets in North Carolina and does not pay
taxes in North Carolina. (Id. at ¶¶ 26, 30.) GFY Coop is the sole shareholder of GFY.
(Id. at ¶ 8.) Plaintiff alleges that GFY Coop is managed and controlled by Dolven.
(ECF No. 261, at ¶ 11.)
8. Defendant GFY Limitada de Capital Variable (“GFY LCV”) is an El
Salvadoran company with its principal place of business in El Salvador. (Id. at ¶ 10;
ECF No. 289.1, at ¶¶ 32, 38.) GFY LCV is owned 99.8% by GFY Coop and .02% by
GFY. (ECF No 289.1, at ¶ 31.) GFY LCV has 125 employees, all of whom are based
in El Salvador. (Id. at ¶ 33.) Although Plaintiff alleges that GFY LCV is managed
and controlled by Dolven, (ECF No. 261, at ¶ 10), Defendants have presented evidence
that GFY LCV has a general manager and other managers in El Salvador who are
responsible for its day-to-day operations. (ECF No. 289.1, at ¶¶ 34–36.) GFY LCV
has produced evidence that it does not have facilities, advertise, or pay taxes, in North
Carolina. (Id. at ¶¶ 37–40.) Plaintiff claims GFY LCV has engaged in purchase and
sale transactions with Plaintiff in North Carolina, (ECF No. 235.1. at ¶¶ 5–8), but
GFY Defendants dispute this claim. (ECF No. 289.1, at ¶ 37.)
9. Defendant GFY SH (“GFY Shanghai”) is a Chinese Company registered
and located in Shanghai, China and is 100% owned by GFY. (ECF No. 289.1, at ¶
42.) GFY Shanghai has 15 employees, all based in China. (Id. at ¶ 48.) Plaintiff
alleges that GFY is “controlled and managed by Dolven,” (ECF No. 261, at ¶ 12), GFY Defendants produced evidence that the day-to-day operations of GFY Shanghai are
managed from China by a General Manager and other employees. (ECF No. 289.1,
at ¶¶ 44–45.) GFY Shanghai does not have tangible assets or pay taxes in North
Carolina. (Id. at ¶¶ 47–53.)
10. Plaintiff uses third-party vendors to provide certain products and
services integral to its manufacturing of its products. Plaintiff contracts with third-
party fabric mills to manufacture some of its fabrics. Plaintiff also contracts with
“cut-and-sew” operations to further process the fabric that Plaintiff manufactures
into final products for its customers. Plaintiff uses an “extremely selective” process
to identify qualified third parties, a process that requires significant amounts of time
and money. (ECF No. 261, at ¶ 29.) The third-party fabric mills and cut-and-sew
operations are located primarily in China.
11. In or around 2005, Plaintiff hired Ryan to set up an office in China and
to oversee all of Plaintiff’s business in Asia. (Id. at ¶¶ 34–35.) Plaintiff initially did
its sourcing in China through a Wholly Owned Foreign Enterprise (“WOFE”) named
Paradise, which was and is owned by Luc Tack. (Id. at ¶ 36.) In 2010, Plaintiff
created Guanteng (“GTA Asia”), another WOFE, to conduct business on its behalf in
Asia. (Id. at ¶ 36.) Ryan was named Director of GTA Asia. (Id.) Through GTA Asia,
Plaintiff invested “significant amounts of time and money” to identify, select, and
develop relationships with Chinese vendors capable of providing high-quality,
reliable products and services for Plaintiff. (Id. at ¶¶ 40–41.) 12. Ryan’s primary job functions for Plaintiff were “to locate factories in
China that could produce fabric for [Plaintiff], to manage the quality of the fabric
produced for [Plaintiff] in those factories, to ensure that fabric produced at those
factories for [Plaintiff] was delivered properly, and to provide general customer
service for [Plaintiff’s] operations in China.” (Graven Prel. Inj. Aff., ECF No. 61.1, at
¶ 3.) Ryan worked on Plaintiff’s behalf in Asia until 2012, when Ryan’s brother,
Garrett Graven (“Garrett”), replaced Ryan as Director of GTA Asia. (ECF No. 261,
at ¶ 38.) Ryan, however, maintained employment with Plaintiff and continued
overseeing various individuals who filled the role of legal representative and Director
of GTA Asia. (Id.)
13. Through their positions with Plaintiff, Timothy, Ryan, Garrett and
others gained extensive and detailed knowledge about all aspects of Plaintiff’s Asia
operations and about the capabilities of Plaintiff’s vendors. (Id. at ¶ 44.) Plaintiff
alleges that they leveraged this knowledge to form the GFY Defendants to compete
with and usurp business opportunities from Plaintiff. (Id. at ¶¶ 125–32.)
14. On or about May 4, 2009, Timothy, Steven, Ryan, and James founded
GFY using Plaintiff’s offices, employees, capital, and other assets. (Id. at ¶ 48.) Ryan
stated that GFY was founded to “manage the sourcing, quality and servicing of [cut-
and-sew] products.” (Id. at ¶ 50.) Steven stated that the creation of GFY was
facilitated by “experiences [Ryan] gained in China” and that GFY was created for the
purpose of having one company “manage cut-and sew facilities, operations, logistics,
quality control, and product in-flow and out flow.” (Id.) 15. Plaintiff alleges that GFY “went into direct competition” with Plaintiff.
(Id. at ¶ 51.) GFY purchased fabric from Plaintiff, which GFY would then send to
third-party cut-and-sew vendors to make products for Plaintiff’s customers. (Id. at
¶ 65.) Plaintiff alleges that “[t]here was no reason that [Plaintiff] could not have
directly sourced its fabrics to the third-party cut and sew operators, as it had done
for many years.” (Id.) Timothy, Steven, Ryan and James did not disclose the creation
of, or their ownership interests in, GFY to Tack. (Id. at ¶ 68.)
16. In August of 2013, Timothy, Steven, Ryan, and James created Dolven,
each owning a twenty-five percent interest in Dolven. (Id. at ¶ 77.) Dolven “is
engaged in sourcing fabrics, cutting and sewing of fabrics, and providing other
services in the bedding and fabric industries.” (Id. at ¶ 3.) Dolven owns, manages,
and controls GFY. (Id. at ¶ 9.) Plaintiff alleges that Dolven was created using
Plaintiff’s resources to divert business from Plaintiff to Dolven. (Id. at ¶ 77.)
17. Plaintiff further alleges that Timothy, Steven, Ryan, and James created
GFY LCV, GFY Shanghai, and GFY Coop in early 2014 to facilitate the diversion of
corporate opportunities by Dolven away from GTA. (Id. at ¶ 82.)
18. According to Plaintiff, Timothy, Steven, Ryan, and Garrett used their
employment with Plaintiff and Plaintiff’s resources to benefit the business interests
of Dolven and the GFY Defendants without disclosing to Plaintiff their ownership
interests in Dolven or the GFY Defendants. (Id. at ¶ 84.) For instance, Plaintiff
alleges that Timothy, Steven, Ryan, and Garett gave preferential treatment to Dolven
and the GFY Defendants in transactions with Plaintiff and usurped opportunities belonging to Plaintiff in favor of Dolven and the GFY Defendants. (Id. at ¶¶ 85–99.)
As a result of this alleged misconduct, Plaintiff claims it has suffered damage to its
relationships with its customers and suppliers and has lost business opportunities,
which rightfully belonged to it. (Id. at ¶¶ 98, 103.)
19. Plaintiff initiated this lawsuit by filing a Verified Complaint on August
15, 2017. (ECF No. 4.)
20. On September 26, 2017, GFY Defendants made a special limited
appearance before the Court “for the purpose of filing a motion to dismiss or otherwise
contesting the Court’s jurisdiction over [GFY Defendants]” and did “not consent or
submit to the jurisdiction of this Court.” (Notice of Limited Special Appearance, ECF
No. 43.)
21. On April 11, 2018, Plaintiff filed the SAC. In the SAC, Plaintiff makes
the following claims against GFY Defendants: actual and constructive fraud (Third
Claim for Relief); common law unfair competition/business conversion (Sixth Claim
for Relief); unfair and deceptive trade practices in violation of North Carolina’s Unfair
and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 (“UDTPA”) (hereinafter,
the North Carolina General Statutes will be referred to as “G.S.”) (Seventh Claim for
Relief); constructive trust (Tenth Claim for Relief); fraudulent transfer under G.S. §
39-23.1, et seq. (Eleventh Claim for Relief); and a motion for preliminary and
permanent injunction (Twelfth Claim for Relief).
22. On May 14, 2018, Defendants filed the GFY Defendants’ Motion and a
brief in support of the Motion. (Br. Supp. GFY Defs.’ Mot. Dismiss, ECF No. 289.) On June 8, 2018, Plaintiff filed its brief in opposition to the GFY Defendants’ Motion.
(Pl.’s Br. Opp. 12(b)(2) Mot. Dismiss, ECF No. 318.) Defendants filed their reply brief
in support of the GFY Defendants’ Motion on June 21, 2018. (ECF No. 329.) The
Court held a hearing on the GFY Defendants’ Motion, and it is now ripe for resolution.
I. ANALYSIS
A. Standard of Review
23. “[T]he plaintiff bears the burden of proving, by a preponderance of the
evidence, grounds for exercising personal jurisdiction over a defendant. . . . [U]pon a
defendant’s motion to dismiss for lack of personal jurisdiction, the plaintiff bears the
burden of making out a prima facie case that jurisdiction exists.” Bauer v. Douglas
Aquatics, Inc., 207 N.C. App. 65, 68, 698 S.E.2d 757, 761 (2010) (internal citation
omitted). When a defendant supports his motion to dismiss for lack of personal
jurisdiction with affidavits, the plaintiff cannot rest on the unverified allegations in
the complaint; rather, the plaintiff must respond by affidavit or otherwise, setting
forth specific facts showing that the court has personal jurisdiction. Id. at 68−69, 698
S.E.2d at 761; Banc of Am. Sec. LLC v. Evergreen Int’l Aviation, Inc., 169 N.C. App.
690, 693, 611 S.E.2d 179, 182 (2005). “An unverified complaint is not an affidavit or
other evidence.” Hill v. Hill, 11 N.C. App. 1, 10, 180 S.E.2d 424, 430 (1971). When a
defendant supports his motion with affidavits and the plaintiff does not offer opposing
evidence, the court considers the uncontroverted allegations in the complaint and all
facts in the defendant’s affidavits in determining whether the court has personal
jurisdiction. Banc of Am. Sec. LLC, 169 N.C. App. at 693−94, 611 S.E.2d at 182−83; see also Weisman v. Blue Mt. Organics Distrib., 2014 NCBC LEXIS 41, at *2 (N.C.
Super. Ct. Sept. 5, 2014) (noting that “allegations in a complaint uncontroverted by
an affidavit are still taken as true”). But, where the parties submit conflicting
affidavits, the Court “must determine the weight and sufficiency of the evidence
[presented in the affidavits] much as a juror.” Banc of Am. Sec. LLC, 169 N.C. App.
at 694, 611 S.E.2d at 183 (citations and quotations omitted).
24. In North Carolina, a court has jurisdiction over a nonresident defendant
if (i) statutory authority for the exercise of jurisdiction under the State’s long-arm
statute, G.S. § 1-75.4, exists and (ii) the nonresident defendant has sufficient contacts
with the State “such that the exercise of jurisdiction does not violate the federal due
process clause.” Bruggeman v. Meditrust Acquisition Co., 138 N.C. App. 612, 614–15,
532 S.E.2d 215, 217 (2000). North Carolina’s long-arm statute allows courts to assert
personal jurisdiction to “the full extent permitted by the Due Process Clause of the
United States Constitution.” Cambridge Homes of N.C., L.P. v. Hyundai Constr., Inc.,
194 N.C. App. 407, 412, 670 S.E.2d 290, 295 (2008) (citations and quotations omitted).
Thus, the Court need not always consider the long-arm statute in its analysis because
“the question of statutory authority collapses into one inquiry—whether defendant
has the minimum contacts necessary to meet the requirements of due process.” Id.
(citations and quotations omitted).
25. For a court to exercise personal jurisdiction over a non-resident
defendant, due process requires that the defendant “have 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.” Int’l Shoe Co. v. Washington,
326 U.S. 310, 316 (1945) (internal quotations omitted); Skinner v. Preferred Credit,
361 N.C. 114, 122, 638 S.E.2d 203, 210 (2006). The defendant must purposefully avail
himself of the privilege of conducting activities in the forum state, thereby invoking
the benefits and protections of the forum state’s laws. Tom Togs, Inc. v. Ben Elias
Indus. Corp., 318 N.C. 361, 365, 348 S.E.2d 782, 786 (1986). In determining whether
a defendant has sufficient minimum contacts, North Carolina courts consider “(1) the
quantity of the contacts, (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) the convenience to the parties.” Banc of Am. Sec. LLC, 169 N.C. App. at 696,
611 S.E.2d at 184.
26. The “relationship between the defendant and the forum must be ‘such
that he should reasonably anticipate being haled into court there.’” Tom Togs, Inc.,
at 365−66, 348 S.E.2d at 786 (quoting World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 297 (1980)). Unilateral activity within the forum state by others who have
some relationship with a non-resident defendant is insufficient. Banc of Am. Sec.
LLC, 169 N.C. App. at 695, 611 S.E.2d at 184. “Each defendant’s contacts with the
forum State must be assessed individually.” Brown v. Refuel Am., Inc., 186 N.C. App.
631, 638, 652 S.E.2d 389, 394 (quoting Calder v. Jones, 465 U.S. 783, 790 (1984)).
27. There are two bases for finding sufficient minimum contacts: (1) general
jurisdiction and (2) specific jurisdiction. General jurisdiction may be asserted over a
defendant “even if the cause of action is unrelated to [the] defendant’s activities in the forum as long as there are sufficient ‘continuous and systematic’ contacts between
[the] defendant and the forum state.” Replacements, Ltd. v. Midwesterling, 133 N.C.
App. 139, 145, 515 S.E.2d 46, 51 (1999). The contacts should “render [the defendant]
essentially at home in the forum state.” Worley v. Moore, 2017 NCBC LEXIS 15, at
*54 (N.C. Super. Ct. Feb. 28, 2017) (quoting Daimler AG v. Bauman, 571 U.S. 117,
127 (2014)). A court should evaluate all contacts with the forum that occurred during
the relevant time period, based on the totality of the circumstances and the facts of
each case. See Sea-Roy Corp. v. Parts R Parts, Inc., 1:94CV00059, 1995 U.S. Dist.
LEXIS 21859, at *34–35 (M.D.N.C. Aug. 16, 1995); Stetser v. TAP Pharm. Prods., 162
N.C. App. 518, 522–23, 591 S.E.2d 572, 576 (2004).
28. By contrast, “[s]pecific jurisdiction exists when the controversy arises
out of the defendant’s contacts with the forum state.” Lab. Corp. of Am. Holdings v.
Caccuro, 212 N.C. App. 564, 569, 712 S.E.2d 696, 701 (2011) (citations and quotations
omitted). The contacts must not be “passive” or based solely on “random, fortuitous,
or unilateral activity of another party or a third person.” Cambridge Homes of N.C.
L.P., 194 N.C. App. at 413, 670 S.E.2d at 296. Instead, the contacts should form “an
affiliation between the forum and the underlying controversy, principally, [an]
activity or an occurrence that takes place in the forum State and is therefore subject
to the State’s regulation.” Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct.
1773, 1780 (2017) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 919 (2011)) (quotations omitted). The defendant must also have “‘fair
warning’ that he may be sued in a state for injuries arising from activities that he ‘purposefully directed’ toward that state’s residents.” Tom Togs, Inc., 318 N.C. at
366, 348 S.E.2d at 786.
29. In support of the Motion, GFY Defendants argue that they are foreign
entities with their principal places of business outside of the United States that lack
sufficient minimum contacts with North Carolina to allow this Court to exercise
jurisdiction over them. (ECF No. 289, at p. 6.) In response, Plaintiff makes several
arguments. Unfortunately, Plaintiff’s briefing and oral arguments in opposition to
the Motion have left the Court somewhat confused as to the legal basis for some of
Plaintiff’s positions. Plaintiff’s overarching contention seems to be that because Ryan
and Dolven are North Carolina residents, have ownership interests in or other
connections to the GFY Defendants, and allegedly control the GFY Defendants, the
GFY Defendants should all be subject to jurisdiction in North Carolina. The Court
and GFY Defendants construe this argument as based on a type of “veil piercing”
theory (ECF No. 329, p. 1); that Ryan and Dolven exert such control over the GFY
Defendants that they have no separate existence of their own. However, at the
hearing, Plaintiff’s counsel denied that Plaintiff was making a veil piercing
argument, but was unable to articulate to the Court’s understanding the actual basis
of their argument. Nevertheless, the Court will address what it interprets as
Plaintiff’s arguments for personal jurisdiction over the GFY Defendants.
30. In construing Plaintiff’s briefing and oral argument, the Court has
identified the following as the contentions presented by Plaintiff: (1) that a filing
made by Dolven in this case constituted a general appearance by GFY and GFY LCV and waived their rights to challenge personal jurisdiction (ECF No. 318, at pp. 2–4);
(2) that corporate documents filed by GFY Coop in the Netherlands and the United
States establish that GFY Coop’s principal place of business is in North Carolina (Id.
at pp. 8, 11); (3) that alleged purchase and sales transactions between GFY
Defendants and Plaintiff provide the Court with jurisdiction over GFY Defendants
(Id. at pp. 18–20); and (4) that Ryan and Dolven’s management and control of GFY
Defendants from North Carolina gives rise to jurisdiction over GFY Defendants. (Id.
passim.) The Court will address each argument in turn.
B. GFY Defendants Did Not Waive Their Rights to Contest Personal Jurisdiction.
31. Plaintiff first argues that certain allegations made by Dolven in
counterclaims that Dolven filed in this lawsuit constitute a general appearance by
GFY and GFY LCV and a waiver of their rights to contest personal jurisdiction. (ECF
No. 318, at pp. 2–3.) Plaintiff cites no authority in support of this contention. The
Court disagrees with Plaintiff’s argument.
32. “A general appearance is one whereby the defendant submits his person
to the jurisdiction of the court by invoking the judgment of the court in any manner
on any question other than that of the jurisdiction of the court over his person.”
Judkins v. Judkins, 113 N.C. App. 734, 737, 441 S.E.2d 139, 140 (1994) (citations and
quotations omitted). GFY and GFY LCV have made only limited special appearances
in this matter for the purpose of contesting personal jurisdiction, and have not
invoked this Court’s jurisdiction. Contrary to Plaintiff’s argument, allegations in
Dolven’s pleadings filed with this Court cannot be used as admissions against co- defendants GFY nor GFY LCV. “Admissions in the answer of one defendant are not
competent evidence against a codefendant” in deciding whether personal jurisdiction
exists. Cambridge Homes of N.C. L.P., 194 N.C. App. at 418, 670 S.E.2d at 299; see
also Barclays American v. Haywood, 65 N.C. App. 387, 389, 308 S.E.2d 921, 923
(1983) (stating that “[f]acts admitted by one defendant are not binding on a co-
defendant”). Therefore, admissions made by Dolven in its answer and counterclaims
cannot constitute a general appearance and waiver of GFY’s and GFY LCV’s rights
to assert lack of personal jurisdiction. The Court concludes that no waiver occurred
and that GFY and GFY LCV have not voluntarily submitted to the Court’s
jurisdiction.
C. The Evidence Before the Court Establishes that GFY Coop’s Principal Place of Business is in Raleigh, North Carolina.
33. The Court next interprets Plaintiff’s briefing as arguing that GFY Coop’s
principal place of business is in North Carolina.3 (ECF No. 318, at pp. 7–10.) Plaintiff
contends that corporate filings made by GFY Coop list its principal place of business
as 1317 Transport Drive, Raleigh, North Carolina. (ECF No. 235.3, at 4–8; Corporate
Documents, ECF No. 305.3, at pp. 1–10.). GFY Coop, however, claims that its
principal place of business is in the Netherlands. (ECF No. 289.1, at ¶ 27.)
3 The Court does not read Plaintiff’s briefing or oral arguments as challenging Defendants’
averments that GFY, GFY LCV, or GFY Shanghai are foreign entities with their principal places of business outside of the United States. In fact, Plaintiff admits in its SAC that GFY and GFY LCV are foreign entities that have their principal places of business in Hong Kong and El Salvador, respectively. (ECF No. 261, at ¶¶ 9, 10.) Plaintiff also recognizes that GFY Shanghai is a Chinese company with operations in China and does not otherwise challenge that its principal place of business is in China. (Id. at ¶ 11; see generally ECF No. 318.) 34. For “a corporation, the place of incorporation and principal place of
business are paradig[m] . . . bases for general jurisdiction.” Daimler, 571 U.S. at 137.
The principal place of business is the corporation’s nerve center, i.e. “the place where
a corporation’s officers direct, control, and coordinate the corporation’s activities.”
Hertz Corp. v. Friend, 559 U.S. 77, 92–93, 130 S. Ct. 1181, 1192, 175 L. Ed. 2d. 1029,
1041 (2010). In determining the location of a defendant’s principal place of business,
courts are directed to ignore jurisdictional manipulation and to focus on “the place of
actual direction, control, and coordination.” Id. at 97.
35. The evidence before the Court demonstrates that GFY Coop made a
filing with the Chamber of Commerce in the Netherlands that “indicates GFY Coop’s
principal place of business is . . . [in] Raleigh, North Carolina” and that “[Dolven] is
a director of GFY Coop.” (ECF No. 235.3, at ¶¶ 8, 10.) The filing states that Dolven
and GFY Coop share the same address. (Id.) GFY Coop also has filed documents
with the United States Internal Revenue Service that list the same Raleigh, North
Carolina address as GFY Coop’s mailing address and list Ryan as director of GFY
Coop. (ECF No. 305.3, at pp. 1–2.) Furthermore, other corporate tax documents
prepared by GFY Coop’s accountants in the Netherlands were sent “to the Board of
Directors of [GFY Coop]” and listed the Transport Drive address in Raleigh, North
Carolina as the address for GFY Coop’s Board of Directors. (Id. at p. 6.) The only
evidence GFY Defendants have presented to the Court in support of its position that
GFY Coop’s principal place of business is in the Netherlands is the affidavit of Ryan
stating as much. 36. Based on the weight of the evidence currently before the Court, the
Court finds that GFY Coop’s principal place of business is in North Carolina and
concludes that this Court may exercise general jurisdiction over GFY Coop. Although
Ryan submitted an affidavit on behalf of GFY Coop stating that GFY Coop’s principal
place of business is in the Netherlands, GFY Coop has not provided any other
evidence in support of that position. On the other hand, GFY Coop’s own official
filings list Raleigh, North Carolina as its principal place of business and mailing
address. This is significant because GFY Coop is a holding company with no
employees, management or otherwise, in the Netherlands and there is no evidence
GFY Coop has any offices in the Netherlands. Instead, the evidence indicates that
Dolven and Ryan are directors of GFY Coop and that GFY Coop is directed/managed
from Dolven’s office in North Carolina. The Court concludes that GFY Coop’s
principal place of business is in North Carolina and GFY Coop is subject to general
jurisdiction in North Carolina.
37. Therefore, this Court has personal jurisdiction over GFY Coop and
concludes that GFY Defendants’ motion to dismiss the claims against GFY Coop for
lack of personal jurisdiction should be DENIED.
D. GFY Defendants’ Purchases from and Sales to Plaintiff in North Carolina
38. It is uncontroverted that GFY, GFY LCV, and GFY Shanghai are non-
resident entities. Nevertheless, Plaintiff contends that certain purchase and sale
transactions between Plaintiff and GFY Defendants provide a basis for this Court to
exercise both general and specific jurisdiction over GFY Defendants. For example, Plaintiff argues that GFY purchased “tens of millions of dollars’ worth of fabric” over
several years and that the sales were “consummated” at Plaintiff’s office in Reidsville,
North Carolina, creating a “systematic and continuous” connection with North
Carolina that justifies a grant of general jurisdiction. (ECF No. 318, at pp. 20–21.)
Plaintiff also argues that it “sold tens of millions of dollars of fabric, mattress covers,
and mattress cover re-work to GFY . . . and purchased tens of millions of dollars in
mattress covers and fabric from GFY,” which “shows that the GFY entities
purposefully engaged in activities in, to, and through North Carolina subjecting them
to [specific] jurisdiction in North Carolina.” (ECF No. 318, at p. 20.) Defendants
argue that the transactions at issue occurred in other jurisdictions and that Plaintiff
has not established that the transactions relate to the current dispute. (Defs.’ Reply
Br., ECF No. 329, at pp. 5–8.)
39. The specific purchase and sale transactions4 (the “transactions”) to
which Plaintiff points in support of its argument are transactions between (1)
Plaintiff and GFY, and (2) Plaintiff and GFY LCV. The transactions include: (1)
GTA’s sale of approximately $17,900,000 of fabric and $440,000 of mattress covers to
GFY between November 2013 and July 2017, shipment terms F.O.B.5 China; (2)
GFY’s sale of over $34,000,000 of mattress covers and over $17,500,000 of fabrics to
4 To the extent Plaintiff relies on general allegations that GFY Defendants transacted business in North Carolina, the Court finds such conclusory allegations insufficient to support an exercise of jurisdiction over GFY Defendants. 5 The shipment term F.O.B. means “free on board” and refers to the place where the risk and
expense associated with a sale transfers from seller to buyer. G.S. § 25-2-319; Peed v. Burleson’s Inc., 244 N.C. 437, 439–440 (1956) (“Where the contract of sale provides for a sale f.o.b. the point of shipment, the title is generally held to pass . . . at the time of the delivery of goods for shipment at the point designated.”). GTA between 2013 and 2017, shipment terms F.O.B. China; (3) GTA’s mattress cover
re-work sales to GFY totaling upwards of $940,000, shipment terms F.O.B. Reidsville;
(4) GTA’s sales of approximately $1,475,000 of sourced fabric to GFY LCV, shipment
terms F.O.B. China; (5) GTA sales of approximately $8,399,000 of fabric to GFY LCV,
shipment terms F.O.B. Reidsville; and (6) GTA’s purchases of approximately $6,665
of fabric from GFY LCV, shipment terms F.O.B. El Salvador. (ECF No. 235.1, at ¶
5–8.)
40. GFY Defendants contend, and have provided evidence, that the
mattress cover re-work sales described above were not made to GFY, but instead
involved Plaintiff’s fabric produced by suppliers other than GFY Defendants, which
were imported by Dolven and paid for by someone other than GFY Defendants. (ECF
329.2, at ¶¶ 5–13.) GFY Defendants also have submitted affidavit evidence stating
that “GFY Defendants do not ship goods or other products to North Carolina or
elsewhere within the United States. Rather, when any GFY Defendants sell any
goods or products, the purchasers, including Dolven, arrange for pick[-]up of such
products outside the United States or otherwise arrange for third-party delivery and
import by entities unassociated with GFY Defendants.” (ECF 289.1, at ¶ 55.)
a. GFY Defendants’ purchases from and sales to Plaintiff in North Carolina are not sufficient to confer general jurisdiction
41. Plaintiff first argues that the sales listed above allow this Court to
exercise general jurisdiction over GFY Defendants. (ECF No. 318, at pp. 17–20.) As
a preliminary matter, Plaintiff has not provided any evidence of any sales or purchase
transactions between Plaintiff and GFY Shanghai, and Plaintiff has failed to establish that the Court has general personal jurisdiction over GFY Shanghai based
on any such transactions.
42. A court may assert general jurisdiction over foreign corporations “when
their affiliations with the State are so continuous and systematic as to render them
essentially at home in the forum State.” Daimler, 571 U.S. at 127 (citations and
quotations omitted). The United States Supreme Court and North Carolina courts
have recognized that this is an exacting standard.
43. In Daimler, the Supreme Court reviewed the Ninth Circuit’s decision to
grant general jurisdiction over defendant Daimler based on the contacts of Daimler’s
alleged agent, Mercedes Benz USA (“MBUSA”), in California. MBUSA was the
largest supplier of luxury cars to California and its sales in California accounted for
2.4% of Daimler’s worldwide sales. Id. at 123. However, the Supreme Court held
that the Ninth Circuit erred in exercising general jurisdiction over defendant Daimler
because, even if the Court imputed to Daimler the California contacts and sales of
Daimler’s alleged agent MBUSA, Daimler was not “at home” in California. Id. at
136–39. Notably, the Court reasoned that granting general jurisdiction based on the
fact that a non-resident defendant had substantial sales in a jurisdiction would make
non-resident defendants amenable to suit in every jurisdiction in which their sales
were sizeable, and would scarcely allow out of state defendants to “structure their
primary conduct with some minimum assurance as to where that conduct will and
will not render them liable to suit.” Id. at 139 (citations and quotations omitted). Such reasoning is directly on point in this case to the extent Plaintiff argues that GFY
Defendants’ sizeable sales with Plaintiff should subject them to general jurisdiction.
44. In Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408 (2011), the
Court reviewed whether Texas courts erred in exercising general jurisdiction over a
non-resident defendant company against whom the plaintiff brought a wrongful
death claim arising from activities in Peru. Id. at 409–11. The Court framed the
general jurisdiction analysis as “whether [the contacts of defendant] constitute the
kind of continuous and systematic general business contacts the Court [has
previously recognized as sufficient in Perkins v. Benguet Consolidated Mining Co.,
342 U.S. 437 (1952)].”6 Id. at 416. The defendants’ contacts with Texas were
comprised of (1) a negotiation session in Houston involving Defendant’s CEO; (2)
purchases of helicopters, spare parts, and other accessories worth over $4 million
from a company in Texas; (3) pilot training in Texas; (4) personnel visits to Texas;
and (5) receipt of over $5 million in payments from Texas bank accounts. Id. at 410–
11. The Texas Supreme Court focused on the purchases and training trips in granting
general jurisdiction. Id. at 417. The U.S. Supreme Court, however, concluded that
“mere purchases, even if occurring at regular intervals, are not enough to warrant a
State’s assertion of in personam jurisdiction over a nonresident corporation in a cause
of action not related to those purchase transactions.” Id. at 418. In other words, even
6 In Perkins, the Court held an Ohio court properly exercised general jurisdiction over a
foreign corporation whose president and general manager maintained an office in Ohio and held directors’ meetings, carried on correspondence relating to the business, distributed salary checks, and otherwise directed company affairs from that office. significant purchase transactions in Texas were insufficient to give rise to general
jurisdiction over the defendant.
45. Likewise, North Carolina courts, including this Court, have refused to
exercise general jurisdiction over a non-resident defendant based on evidence that it
does significant business in the State of North Carolina, unless evidence is presented
that the nature or amount of the business would render the defendant at home in
North Carolina. See e.g., Occidental Fire & Cas. Co. v. Cont'l Ill. Nat'l Bank & Tr.
Co., 689 F. Supp. 564, 568 & n.1 (E.D.N.C. 1988) (finding no general jurisdiction even
though the non-resident defendant's loan activity in the forum state exceeded $100
million); Ash v. Burnham Corp., 80 N.C. App. 459, 461–62, 343 S.E.2d 2, 3–4
(1986) (holding that the defendant’s sales to North Carolina customers, comprising
0.5% of its total annual sales, was insufficient to support jurisdiction); Weisman, 2014
NCBC LEXIS 41, at *12 (evidence that defendant-company “received only 3.6% of its
total sales volume from North Carolina” was “insufficient to support general
jurisdiction”). Indeed, this Court recently noted that the Business Court “and the
North Carolina appellate courts have yet to find a sufficiently ‘exceptional case’ after
Daimler to extend general jurisdiction to a corporation or a limited liability company
in North Carolina that has neither organized itself in this State nor located its
principal place of business here.” AYM Techs., LLC., 2018 NCBC LEXIS 14, at *19.
46. After reviewing the evidence and the relevant authority, the Court
concludes that it does not have general jurisdiction over GFY or GFY LCV. First,
Plaintiff has provided no context for the sales and purchase figures it supplies from which the Court could conclude whether the volume of GFY and GFY LCV’s
transactions with Plaintiff constituted a significant portion of their sales for the
periods in question, nor what percentage of Plaintiff’s purchases and sales the
transactions constituted. Second, all but a small percentage of the transactions
between Plaintiff and GFY are “F.O.B. China”, and some of the transactions between
Plaintiff and GFY LCV are “F.O.B. China” or “F.O.B. El Salvador.” Therefore, a
substantial portion of the transactions upon which Plaintiff relies can be interpreted
as having been consummated in China or El Salvador and not in North Carolina. See
Pyrotek, Inc. v. Motionmaster, Inc., No. 1:04CV00549, 2006 U.S. Dist. LEXIS 57007,
at *12 (M.D.N.C. Feb. 22, 2006) (finding ,where plaintiff sought recovery for faulty
equipment it purchased from defendant, “[defendant]’s agreement to manufacture
the Equipment and send it [to plaintiff] ‘F.O.B. Vista, California’ [was] likely not
sufficient to give rise to jurisdiction in North Carolina”); see also Golden Belt Mfg. Co.
v. Janler Plastic Mold Corp., 281 F. Supp. 368 (M.D.N.C. 1967), aff’d, 391 F.2d 266
(4th Cir. 1968) (holding that exercising personal jurisdiction over the defendant in
North Carolina would offend due process where a contract was initiated by the
plaintiff for defendant, a Chicago plastic mold manufacturer, to ship molds to North
Carolina, F.O.B. Chicago); see also Bay Tobacco, LLC v. Bell Quality Tobacco Prods.,
LLC, 261 F. Supp. 2d 483, 494 (E.D.Va. 2003) (“[Defendant]’s F[.]O[.]B[.] delivery of
cigarettes to a common carrier in . . . North Carolina for transport into Virginia
diminishes the jurisdictional significance of such shipments. . . . [and] does not show
that [defendant] transacted business in [Virginia].”). b. GFY’s and GFY LCV’s contacts with North Carolina are not sufficient to confer specific jurisdiction on the Court
47. Plaintiff also argues that the transactions between itself and GFY, and
between itself and GFY LCV, support specific jurisdiction. “North Carolina exercises
specific jurisdiction over a party when it exercises personal jurisdiction in a suit
arising out of that party’s contacts within the state.” Fran's Pecans, Inc. v. Greene,
134 N.C. App. 110, 114, 516 S.E.2d 647, 650 (1999). “The alleged injuries must arise
out of activities defendants ‘purposefully directed’ toward the state’s residents.”
Stetser, 162 N.C. App at 521, 591 S.E.2d at 575 (quoting Tom Togs, Inc., 318 N.C. at
366, 348 S.E.2d at 786). In analyzing whether the sales transactions between
Plaintiff and GFY and Plaintiff and GFY LCV permit the exercise of specific personal
jurisdiction over GFY or GFY LCV the Court considers: “(1) the quantity of the
contacts, (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) the
convenience to the parties.” Banc of Am. Sec. LLC, 169 N.C. App. at 696, 611 S.E.2d
at 184.
48. Plaintiff makes only conclusory allegations and arguments in support of
its position that GFY’s and GFY LCV’s purchases and sales transactions with
Plaintiff provide a basis for specific jurisdiction. (ECF No. 318, at pp. 18–20.) For
example, Plaintiff claims that “[a]ll of [the GFY Defendants’] sales and purchases and
the manner in which they were obtained and achieved are the subject of GTA’s
lawsuit against the GFY entities.” (Id. at p. 18.) The Court already has concluded,
the GFY Defendants’ transactional contacts with North Carolina are not sufficient to confer general jurisdiction. In addition, while North Carolina has an interest in
providing a forum for its residents to seek redress for injuries they suffer, Plaintiff
has not identified any other particular State interests implicated by the discreet
transactions at issue here. Most importantly, however, Plaintiffs do not allege that
the GFY Defendants directed conduct towards North Carolina from which their
claims in this lawsuit arise. Tom Togs, Inc., 318 N.C. at 365–66, 348 S.E.2d at 786
(The “relationship between the defendant and the forum must be such that he should
reasonably anticipate being haled into court there” (internal quotation marks
omitted). Rather, Plaintiffs contend that the GFY Defendants’ transactions have a
connection to North Carolina because they are the result of the alleged wrongdoing
by the individual defendants or Dolven, and since the Court has personal jurisdiction
over those parties it should exercise personal jurisdiction over the GFY Defendants.
The Court does not find Plaintiff’s argument persuasive, and concludes that Plaintiff
has failed to carry its burden of establishing that the Court should exercise personal
jurisdiction over GFY and GFY LCV based on alleged contacts arising from the sales
transactions between those companies and Plaintiff. Id. at 365, 348 S.E.2d at 786.
(“[T]he unilateral activity within the forum state of others who claim some
relationship with a non-resident defendant will not suffice” to confer specific
jurisdiction.).
E. Dolven and Ryan’s Management and Control of GFY Defendants
49. Finally, the Court addresses Plaintiff’s overarching contention: that the
Court should exercise personal jurisdiction over GFY Defendants because the GFY Defendants are mere instrumentalities of Dolven “created . . . to facilitate the
diversion of corporate opportunities by Dolven away from” Plaintiff, and the GFY
Defendants are “controlled and managed” by Dolven and Ryan from North Carolina.
(ECF No. 261, at ¶¶ 9–12, 82; ECF No. 318, at pp. 12, 14.) Despite Plaintiff’s
protestations, the Court views this as a veil-piercing theory.
50. This Court will disregard an entity’s corporate form only if the
corporation is so operated as to be “a mere instrumentality or alter ego of the sole or
dominant shareholder.” State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C.
431, 440–41, 666 S.E.2d 107, 113–14, (2008) (citations and quotations omitted). To
show that a subsidiary is a mere instrument of a parent corporation or an individual,
a plaintiff must present evidence of:
(1) Control, not mere majority or complete stock control, but complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; and
(2) Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of [a] plaintiff's legal rights; and,
(3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
Green v. Freeman, 367 N.C. 136, 145–46, 749 S.E.2d 262, 270 (2013) (quoting Glenn
v. Wagner, 313 N.C. 450, 455, 329 S.E.2d 326, 330 (1985)). Courts have relied on the
following types of evidence to justify piercing the corporate veil: “inadequate
capitalization, noncompliance with corporate formalities, lack of a separate corporate identity, excessive fragmentation, siphoning of funds by the dominant shareholder,
nonfunctioning officers and directors, and absence of corporate records.” Id. at 145,
749 S.E.2d at 270. In the absence of such supporting evidence, however, courts will
not pierce the corporate veil to establish jurisdiction over non-resident defendants.
State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 188 N.C. App. 302, 306, 655
S.E.2d 446, 449 (2008) (holding that conclusory allegations concerning alter-ego
liability or corporate veil piercing, without any other supporting evidence, cannot
support exercising personal jurisdiction over a nonresident defendant); see also
Weisman, 2014 NCBC LEXIS 41, at *17 (holding same).
51. As an initial matter, Plaintiff has neither alleged nor provided evidence
that any GFY Defendant is a mere instrumentality of Dolven or Ryan. For example,
Plaintiff has not alleged that GFY Defendants are inadequately capitalized, fail to
follow corporate formalities, or do not maintain adequate corporate records,7 or that
Dolven is siphoning off funds from any GFY Defendants. Instead, Plaintiff points to
evidence that Ryan is listed as a director, representative, or manager of the various
GFY Defendants (ECF No. 318, at pp. 7–10); that Ryan, along with Timothy, Steven,
and James created Dolven and GFY, and GFY is owned by Dolven (Id. at pp. 13–14);
that the GFY Defendants are interrelated by their ownership structure (Id. at p. 14);
and that Ryan has ultimate authority over, and is involved in directing certain
operations of, GFY Defendants (Id. at pp. 14–17.) Plaintiff contends that this
7 To the contrary, Plaintiff has filed with the Court a number of documents and records filed
and/or maintained by the GFY Defendants that appear to demonstrate that they observe formalities, make separate corporate filings, and maintain appropriate corporate records. (See, e.g., ECF Nos. 235.3–235.6; 305.3.) evidence establishes that “Ryan . . . along with Dolven . . . [is] in full operational
control of the GFY entities and, as such, his activities confer jurisdiction on the courts
of North Carolina.” (Id. at p. 14.)
52. Without more, the mere fact that Dolven is a parent or affiliate of GFY
Defendants does not confer jurisdiction over the GFY Defendants in North Carolina.
A court may not exercise general personal jurisdiction over a company simply because
its director, shareholder, parent company, subsidiary, or affiliate operates in or is
otherwise subject to general personal jurisdiction in a state. See, e.g., Daimler, 571
U.S. at 136 (concluding that “to subject foreign corporations to general jurisdiction
whenever they have an in-state subsidiary or affiliate [is] an outcome that would
sweep beyond even the ‘sprawling view of general jurisdiction’ we rejected in
Goodyear.” (citations omitted)); see also Goodyear, 564 U.S. at 929–30 (finding that
there can be no general personal jurisdiction over foreign subsidiaries of a corporation
based on contacts of parent corporation); Speedway Motorsports Int’l Ltd. v. Bronwen
Energy Trading, Ltd., 209 N.C. App. 474, 490, 707 S.E.2d 385, 395 (2011) (recognizing
that a subsidiary cannot be subjected to personal jurisdiction in a forum in which a
parent does business unless it has its own direct contacts or unless the two entities
“are part of the same whole and were not acting independently”).
53. Furthermore, despite Plaintiff’s allegations regarding Ryan’s control
and management of the GFY Defendants, it has not provided any evidence that Ryan
made any specific decisions for, or directed any specific conduct by, the GFY
Defendants from North Carolina. On the other hand, GFY Defendants have provided evidence that GFY and GFY Shanghai maintain offices, and have management and
other employees responsible for their day-to-day operations located in China, and
GFY LCV has facilities and management and other employees in El Salvador. (ECF
No. 289.1, at ¶¶ 10, 11, 13, 15, 32, 33, 42, 44–48.)
54. Having thoroughly reviewed the evidence and arguments, the Court
concludes that Plaintiff has failed to carry its burden of establishing that the Court
may exercise personal jurisdiction over GFY, GFY Shanghai, or GFY LCV based on
a veil-piercing or alter ego theory. Therefore, GFY Defendants’ motion to dismiss
Plaintiff’s claims against GFY, GFY Shanghai, and GFY LCV for lack of personal
jurisdiction over those parties should be GRANTED.
CONCLUSION
55. In conclusion, the Plaintiff has carried its burden of establishing
grounds for asserting personal jurisdiction over GFY Coop, but has failed to establish
grounds for this Court to exercise jurisdiction over GFY, GFY LCV, or GFY Shanghai.
Therefore, it is ORDERED that:
56. Plaintiff’s Motions to Strike are DENIED;
57. GFY Defendants’ Motion is GRANTED with respect to GFY, GFY LCV,
and GFY Shanghai, and the claims against those Defendants are DISMISSED;
58. GFY Defendants’ Motion is DENIED with respect to the claims against
GFY Coop. SO ORDERED, this the 14th day of November, 2018.
/s/ Gregory P. McGuire Gregory P. McGuire Special Superior Court Judge for Complex Business Cases