Jcg & Assocs., LLC v. Disaster Am. USA, LLC

2019 NCBC 78

• Court: North Carolina Business Court
• Decided: December 19, 2019
• Docket: 19-CVS-746
• Status: Published

Opinion

JCG & Assocs., LLC v. Disaster Am. USA, LLC, 2019 NCBC 78.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION BRUNSWICK COUNTY 19 CVS 746

JCG & ASSOCIATES, LLC; MIP 1, LLC; JAMES BONICA; and PATRICIA BONICA,

Plaintiffs and Counterclaim Defendants, ORDER AND OPINION ON DEFENDANT DONALD HUSK’S v. MOTION TO DISMISS DISASTER AMERICA USA, LLC; DA ROOFING SYSTEMS; DONALD HUSK; and JASON HUSK,

Defendants,

and

DISASTER AMERICA OF NORTH CAROLINA, LLC,

Defendant and Counterclaim Plaintiff.

1. Hurricane Florence devastated eastern North Carolina in 2018. When the

storm dissipated, property owners began the toilsome process of repair and

remediation. Among them were James and Patricia Bonica and MIP 1, LLC, each of

whom were approached by Disaster America USA, LLC and Disaster America of

North Carolina, LLC (together, “Disaster America”) about repair services. The

Bonicas and MIP 1 now allege that they were duped—that Disaster America was an

unlicensed contractor that either overcharged them or charged them for services that

were never performed. A fourth plaintiff, JCG & Associates, LLC, alleges that

Disaster America fraudulently used its name and general contractor’s license as part

of the scheme. 2. This Opinion addresses a motion to dismiss by Donald Husk, one of Disaster

America’s principals. The complaint alleges that Husk and his son (Jason) share

responsibility for Disaster America’s misconduct. Husk argues that this Court lacks

personal jurisdiction over him and, as a result, that all claims against him must be

dismissed. (ECF No. 4.) For the reasons given below, the Court DENIES the motion.

Shipman & Wright, LLP, by William Cory Reiss, for Plaintiffs JCG & Associates, LLC, MIP 1, LLC, James Bonica, and Patricia Bonica.

Hodges Coxe & Potter, LLP, by Samuel B. Potter, for Defendants Disaster America USA, LLC, Disaster America of North Carolina, LLC, DA Roofing Systems, Donald Husk, and Jason Husk.

Conrad, Judge. I. DISCUSSION

3. The issue here is whether the plaintiffs have made a prima facie showing of

personal jurisdiction over Husk. To decide that issue, the Court must consider the

parties’ competing affidavits. See, e.g., Bauer v. Douglas Aquatics, Inc., 207 N.C. App.

65, 68–69, 698 S.E.2d 757, 761 (2010) (deciding whether plaintiff carried his burden

to make out prima facie case based on dueling affidavits). In addition, allegations in

the complaint, if not contradicted by the defendant’s affidavits, “are accepted as true

and deemed controlling.” Inspirational Network, Inc. v. Combs, 131 N.C. App. 231,

235, 506 S.E.2d 754, 758 (1998). Thus, the record includes “the uncontroverted

allegations in the complaint and the uncontroverted facts in the sworn affidavit[s]”

and associated exhibits. Bruggeman v. Meditrust Acquisition Co., 138 N.C. App. 612,

616, 532 S.E.2d 215, 218 (2000). 4. Briefing is complete, and the Court held a nonevidentiary hearing on

September 20, 2019, at which all parties were represented by counsel. Husk’s motion

is ripe for determination.

A. Background

5. North Carolina has seen its share of natural disasters in recent years.

Among the worst was Hurricane Florence. This powerful, slow-moving storm made

landfall in September 2018 and caused extensive damage all along the coast. The

Village of Bald Head Island was not spared. Homeowners, including the Bonicas and

MIP 1, could not access the village for two weeks after the storm. (See Compl. ¶ 31,

ECF No. 2.) They eventually returned home to find substantial wind and water

damage. (See Compl. ¶¶ 32, 33.) Shortly after, the Bonicas and MIP 1 engaged

Disaster America to perform repairs. (See Compl. ¶¶ 34, 35.)

6. Disaster America is a group of related companies that provides catastrophic

remediation and restoration services. (See Compl. ¶¶ 13, 15.) These companies

include Disaster America USA, which is a Texas LLC, and Disaster America of North

Carolina, which is a North Carolina LLC. (Compl. ¶¶ 4, 6.) Donald Husk, a Texas

resident, is the CEO of both. (See Def.’s Ex. A ¶¶ 2, 5, 7, ECF No. 18.2 [“Husk Aff.”].)

Beyond that, the outline of Disaster America’s portfolio is less clear. The complaint

suggests that it includes at least one unincorporated entity (DA Roofing Systems, also

a defendant) and a number of transient entities first organized in States where

natural disasters occurred and later dissolved or left dormant after the repair work dried up, perhaps to be revived should Mother Nature strike again. (See Compl. ¶¶ 5,

15.)

7. It appears that Disaster America approached the Bonicas and MIP 1 to

secure their business. Husk’s son contacted them and provided copies of the contracts

that each later signed. (See Compl. ¶¶ 34, 35.) The contracts do not specify the

anticipated scope of repairs. Rather, they authorize Disaster America to negotiate

with the homeowners’ insurance carriers and then to perform approved repairs for

the full scope of insurance proceeds. (See Pls.’ Ex. 1, ECF No. 23.2; Compl. ¶¶ 37, 38.)

The contracts identify “DISASTER AMERICA USA, LLC/JCG & ASSOCIATES,

LLC” as the general contractor. (See Pls.’ Ex. 1; Compl. ¶ 40.)

8. In his affidavit, Husk denies drafting the contracts, making any

representations to the Bonicas or MIP 1, or traveling to North Carolina for any

purpose related to this case. (See Husk Aff. ¶¶ 1, 10, 16.) But he did sign the

contracts on behalf of Disaster America. (Pls.’ Ex. 1.) And the contracts state that

they were “produced by DA ROOFING SYSTEMS/JCG & ASSOCIATES LLC . . .

JH/dh,” the initials “dh” standing for Husk. (Pls.’ Ex. 1; see also Compl. ¶ 44.) Husk

also helped to carry out the contracts at least by engaging a North Carolina company

called Miracle Movers to pack and store the homeowners’ personal property. (See

Compl. ¶ 58; Pls.’ Ex. 2, ECF No. 23.3.)

9. Within six months, the Bonicas and MIP 1 had separately given notice to

terminate their contracts. (See Pls.’ Ex. 3 ¶¶ 6, 9, ECF No. 23.4 [“Reiss Aff.”].) Their

reasons were twofold. First, they asserted that Disaster America had no general contractor’s license at the time of the contracts and fraudulently identified JCG &

Associates for that purpose, rendering the contracts invalid. (See Compl. ¶¶ 52, 66;

Reiss Aff. Ex. B, ECF No. 23.7; Pls.’ Ex. 4 ¶ 10, ECF No. 23.17.) They further asserted

that Disaster America hadn’t actually performed any restoration work. (See Compl.

¶¶ 52, 66; Reiss Aff. Ex. B.)

10. Husk responded on behalf of Disaster America. In a letter to MIP 1’s

counsel, Husk submitted an unpaid invoice and threatened to place a lien on MIP 1’s

North Carolina property if payment was not made within seven days. (See Reiss Aff.

¶ 7; Reiss Aff. Ex. A, ECF No. 23.6.) In an e-mail to the Bonicas’ counsel, Husk

warned that any stored personal belongings would not be released absent full

payment. (Reiss Aff. ¶ 10; Reiss Aff. Ex. C, ECF No. 23.8.)

11. This lawsuit ensued. The Bonicas and MIP 1 allege that the demands made

by Husk constitute unfair debt collection practices. (Compl. ¶¶ 109–12.) They also

assert claims for fraud, constructive fraud, unfair or deceptive trade practices,

racketeering, and negligence, among others. Underlying these claims are allegations

that Disaster America wrongfully used the name and general contractor’s license of

JCG & Associates to obtain business and also inflated invoices by overcharging or

charging for work that was never performed, including the work assigned to Miracle

Movers. JCG & Associates has asserted similar claims, along with a claim for

trademark infringement. B. Analysis

12. Determining whether personal jurisdiction exists is often described as a two-

step inquiry: does any statute grant jurisdiction over the defendant, and would

exercising jurisdiction violate due process? Husk does not challenge the Court’s

statutory authority. So the Court addresses only step two.

13. “The Due Process Clause of the Fourteenth Amendment [to the United

States Constitution] limits the power of a state court to render a valid personal

judgment against a nonresident defendant.” World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 291 (1980). The defendant must have “certain minimum

contacts” with the forum “such that 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) (citation and quotation marks omitted). In most cases,

including this one, the pertinent question is whether the claims at issue arise out of

the defendant’s conduct within or directed to the forum State. This is called “specific

or case-linked jurisdiction.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564

U.S. 915, 919 (2011). The relevant contacts are those that the defendant (not someone

else) creates with the forum State. See Walden v. Fiore, 571 U.S. 277, 284–85 (2014).

14. Husk’s brief is blunt. He argues that the complaint includes no allegations

that he “completed any acts in his individual capacity.” (Br. in Supp. 4, ECF No. 18.)

Rather, “[a]t all times relevant to the facts in this case, Husk has only had contact in

the State of North Carolina in his capacity as CEO of [Disaster America], and while

acting on behalf of [Disaster America].” (Br. in Supp. 6.) Contacts made as a company officer, Husk argues, are not sufficient to establish personal jurisdiction. (See Br. in

Supp. 4–6.)

15. This argument goes too far. A defendant’s status as a corporate officer does

not, by itself, subject him to jurisdiction wherever the corporation is subject to suit.

See, e.g., Calder v. Jones, 465 U.S. 783, 790 (1984); Robbins v. Ingham, 179 N.C. App.

764, 771, 635 S.E.2d 610, 615 (2006). But neither does it “somehow insulate [him]

from jurisdiction.” Calder, 465 U.S. at 790. Our courts have rejected the argument

that “personal jurisdiction over a defendant may only be based on the contacts he has

with the state in the course of his private life.” Saft Am., Inc. v. Plainview Batteries,

Inc., 189 N.C. App. 579, 596, 659 S.E.2d 39, 50 (2008) (Arrowood, J., dissenting), rev’d

for reasons stated in dissent, 363 N.C. 5, 673 S.E.2d 864 (2009) (per curiam). Put

simply, “a corporate officer’s contacts with North Carolina—whether established in

his individual capacity or in his capacity as an officer or agent of his company—count

for purposes of determining whether that particular individual has sufficient

minimum contacts with North Carolina.” Insight Health Corp. v. Marquis Diagnostic

Imaging of N.C., LLC, 2015 NCBC LEXIS 7, at *19 (N.C. Super. Ct. Jan. 21, 2015)

(collecting cases).

16. At oral argument, Husk’s counsel acknowledged as much and instead

pressed a narrower position, insisting that any contacts Husk had with North

Carolina in his corporate capacity were too insubstantial to support jurisdiction.

Even assuming this argument is timely, the Court disagrees. It is undisputed that

Husk prepared and sent a demand for payment to MIP 1’s counsel in North Carolina in which he threatened to file a lien on MIP 1’s North Carolina property. (See Reiss

Aff. Ex. A; Husk Aff. ¶ 9.) Separately, Husk told the Bonicas that their personal

property in North Carolina would not “be released until which time Disaster America

is paid in full.” (See Reiss Aff. Ex. C.) As alleged, Husk sent these communications

with full knowledge that the contracts—which he had signed—were invalid because

Disaster America had no general contractor’s license at the time they were made.

(See Compl. ¶ 109.) These acts, directed to North Carolina, give rise to at least the

asserted claim for unfair debt collection practices.

17. It would not offend traditional notions of fair play and substantial justice to

exercise jurisdiction over Husk in these circumstances. His “intentional, and

allegedly tortious, actions were expressly aimed at” North Carolina, and he knew that

any injury from threatening to impose a lien on real property or withholding personal

property would be felt here. Calder, 465 U.S. at 789. Husk should have reasonably

anticipated being sued in this forum. See, e.g., Eades v. Kennedy, PC Law Offices,

799 F.3d 161, 168–69 (2d Cir. 2015) (affirming exercise of personal jurisdiction based

on attempts to collect debt in forum); ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 177

(4th Cir. 2002) (affirming exercise of personal jurisdiction based on submission of

false credit applications to two companies in forum).

18. Of course, the asserted claims go beyond allegedly unfair debt collection

practices, and many courts have held that specific jurisdiction should be decided on

a claim-by-claim basis. See, e.g., Marten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007);

Phillips Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d 284, 289 (1st Cir. 1999). Here, though, Husk “did not argue that personal jurisdiction might exist over some

claims and not others, nor did [he] offer a more nuanced, claim-by-claim analysis of

the personal jurisdiction issue.” SEC v. Straub, 2013 U.S. Dist. LEXIS 116483, at

*18 (S.D.N.Y. Aug. 5, 2013). For that reason, the Court need not and does not decide

whether a claim-by-claim analysis would have been appropriate or what the result of

that analysis would have been. See Grynberg v. Ivanhoe Energy, Inc., 490 Fed. App’x

86, 92 n.4 (10th Cir. 2012) (“Consequently, because the parties have not advanced

their specific-jurisdiction arguments on a claim-by-claim basis, we have no need to

opine regarding the appropriateness of this mode of analysis and about whether

employing it might affect the outcomes that we reach here.”).

19. In short, the contacts Husk made with North Carolina in his capacity as an

officer of Disaster America are not only relevant but sufficient to satisfy the minimum

contacts required by principles of due process. The Court concludes that the plaintiffs

have carried their burden to make a prima facie showing of personal jurisdiction.

II. CONCLUSION

20. For these reasons, the Court DENIES Husk’s motion to dismiss for lack of

personal jurisdiction. SO ORDERED, this the 19th day of December, 2019.

/s/ Adam M. Conrad Adam M. Conrad Special Superior Court Judge for Complex Business Cases