IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA19-1078
Filed: 1 December 2020
Durham County, No. 19 CVS 1958
PETER MILLAR, LLC, Plaintiff-Appellant,
v.
SHAW’S MENSWEAR, INC., d/b/a THE SHAW GROUP RETAIL CONSULTANTS, Third-Party Plaintiff-Defendant-Appellee,
JC NAPLES, INC., G.C. OF WINTER PARK, INC., JCWP, LLC, and HOWARD CRAIG DELONGY, Third-Party Defendants-Appellants.
Appeal by plaintiff-appellant and third-party defendants-appellants from
order entered 6 August 2019 by Judge Orlando F. Hudson, Jr. in Durham County
Superior Court. Heard in the Court of Appeals 12 August 2020.
Williams Mullen, by Camden R. Webb and Lauren E. Fussell, for plaintiff- appellant.
Manning Fulton & Skinner P.A., by William S. Cherry, III and Jessica B. Vickers, for defendant-appellee.
Graebe Hanna & Sullivan, PLLC, by Christopher T. Graebe and J. William Graebe, for third-party defendants-appellants.
BERGER, Judge.
On August 6, 2019, the trial court entered an order denying Appellants JC
Naples, Inc.; G.C. of Winter Park, Inc.; JCWP, LLC; and Howard Craig Delongy’s
(collectively, “Delongy Stores”) motions to dismiss and granting Appellee Shaw’s PETER MILLAR, LLC V. SHAW’S MENSWEAR, INC.
Opinion of the Court
Menswear, Inc.’s (“Shaw”) motion to stay. Appellant Peter Millar, LLC (“Millar”)
argues the trial court erred when it granted the motion to stay. Delongy Stores
argues the trial court erred when it (1) denied the motions to dismiss the third-party
complaint for improper venue and for lack of personal jurisdiction, and (2) did not
award attorneys’ fees pursuant to the contract between the parties. For the reasons
stated herein, we affirm the trial court’s order granting the motion to stay and
denying attorneys’ fees. We remand with instructions to enter an order dismissing
the third-party complaint for improper venue and lack of personal jurisdiction.
Factual and Procedural Background
Delongy Stores and Shaw are parties to various consignment agreements (the
“Consignment Agreements”). Shaw, a men’s clothing wholesaler in Georgia, agreed
to purchase inventory from manufacturing suppliers for Delongy Stores, a group of
men’s clothing retailers in Florida. Pursuant to the Consignment Agreements,
Delongy Stores “select[s] the inventory to be consigned” to them by submitting orders
to the manufacturing suppliers using forms provided by Shaw. Shaw is “responsible
for approving the amount of inventory requested by and to be consigned” to Delongy
Stores. Then, Shaw will “deliver or cause to be delivered” the selected inventory to
Delongy Stores. Shaw retains ownership of the inventory while it is in the possession
of Delongy Stores. As Delongy Stores sells its consigned inventory, the sale proceeds
are deposited in an account owned by Shaw. Shaw uses the proceeds to reimburse
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the manufacturing suppliers, take a commission, and pay the balance to Delongy
Stores.
Millar, a North Carolina men’s clothing manufacturer, provides inventory to
Shaw, some of which was consigned in Delongy Stores. According to Millar’s verified
complaint, “[a]s part of Shaw’s services, . . . on behalf of Delongy Stores,” Shaw was
required to “pay[] [Millar] for merchandise that [was] shipped to [Delongy Stores].”
As of February 6, 2019, Shaw owed Millar $448,050.66 for inventory shipped to
Delongy Stores.
On February 8, 2019, Shaw filed suit against Delongy Stores in Georgia
Superior Court for default and breach of the Consignment Agreements. Shaw did not
name Millar as a party in the Georgia action. Delongy Stores removed the Georgia
action to the United States District Court for the Middle District of Georgia.
However, that court remanded the action back to Georgia Superior Court because the
forum selection clause in the Consignment Agreements “requires the suit to take
place in [the proper Georgia Superior court.]”
On February 6, 2019, Millar filed suit against Shaw in Durham County (North
Carolina) Superior Court for the past due account. Shaw filed an answer, and also
filed a third-party complaint against Delongy Stores. Delongy Stores subsequently
filed a motion to dismiss the third-party complaint for improper venue and for lack of
personal jurisdiction. Shaw filed a motion to stay the North Carolina action.
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On August 6, 2019, the trial court entered an order denying Delongy Stores’
motions to dismiss and granting Shaw’s motion to stay. Millar argues the trial court
erred when it granted Shaw’s motion to stay. Delongy Stores argues the trial court
erred when it (1) denied the motions to dismiss the third-party complaint for improper
venue and for lack of personal jurisdiction, and (2) did not award attorneys’ fees
pursuant to the Consignment Agreements. We address each issue below.
Analysis
I. Interlocutory Appeals
“As a general rule, there is no right of appeal from an interlocutory order.”
Edwards v. Foley, 253 N.C. App. 410, 411, 800 S.E.2d 755, 756 (2017).
However, when “a motion for a stay . . . is granted, any nonmoving party shall
have the right of immediate appeal.” N.C. Gen. Stat. § 1-75.12(c) (2019). Thus,
Millar’s appeal is properly before this Court.
In addition, Delongy Stores’ appeal of its motion to dismiss the third-party
complaint for lack of personal jurisdiction is properly before this Court. “Any
interested party shall have the right of immediate appeal from an adverse ruling as
to the jurisdiction of the court over the person or property of the defendant[.]” N.C.
Gen. Stat. § 1-277(b) (2019).
Further, Delongy Stores’ appeal of its motion to dismiss the third-party
complaint for improper venue is properly before us. This Court has previously stated,
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“an appeal from a motion to dismiss for improper venue based upon a jurisdiction or
venue selection clause dispute deprives the appellant of a substantial right that
would be lost.” Mark Grp. Int’l, Inc. v. Still, 151 N.C. App. 565, 566, 566 S.E.2d 160,
161 n.1 (2002). See Hill v. StubHub, Inc., 219 N.C. App. 227, 232, 727 S.E.2d 550,
554 (2012) (“immediate appellate review of an interlocutory order is available . . .
when the interlocutory order affects a substantial right under N.C. Gen. Stat. § 1-
277(a)[.]”).
However, an “order granting attorney’s fees is interlocutory as it does not
finally determine the action nor affect a substantial right which might be lost,
prejudiced or be less than adequately protected by exception to entry of the
interlocutory order.” Benfield v. Benfield, 89 N.C. App. 415, 419, 366 S.E.2d 500, 503
(1988) (citation and quotation marks omitted). Here, the trial court’s decision to not
award attorneys’ fees is interlocutory and is “best left until the underlying action has
been resolved[.]” Andaloro v. Sawyer, 144 N.C. App. 611, 614, 551 S.E.2d 128, 131
(2001). Therefore, we dismiss this issue as interlocutory.
II. Motion to Stay
“We review a trial court’s grant of a motion to stay for an abuse of discretion.”
Bryant & Assocs., LLC v. ARC Fin. Servs., LLC, 238 N.C. App. 1, 4, 767 S.E.2d 87, 90
(2014) (citation omitted). This Court
[does] not re-weigh the evidence before the trial court or endeavor to make our own determination of whether a stay
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should have been granted. Instead, mindful not to substitute our judgment in place of the trial court’s, we consider only whether the trial court’s [grant] was a patently arbitrary decision, manifestly unsupported by reason.
Id. at 4, 767 S.E.2d at 90 (citation omitted). “[A]ppellate review is limited to insuring
that the decision could, in light of the factual context in which it was made, be the
product of reason.” Home Indem. Co. v. Hoechst Celanese Corp., 128 N.C. App. 113,
118, 493 S.E.2d 806, 809 (1997) (citation omitted).
If, in any action pending in any court of this State, the judge shall find that it would work substantial injustice for the action to be tried in a court of this State, the judge on motion of any party may enter an order to stay further proceedings in the action in this State.
N.C. Gen. Stat. § 1-75.12(a) (2019). Traditionally, our Courts have considered the
following factors to determine whether a substantial injustice would result if the trial
court denied the stay:
(1) the nature of the case, (2) the convenience of the witnesses, (3) the availability of compulsory process to produce witnesses, (4) the relative ease of access to sources of proof, (5) the applicable law, (6) the burden of litigating matters not of local concern, (7) the desirability of litigating matters of local concern in local courts, (8) convenience and access to another forum, (9) choice of forum by plaintiff, and (10) all other practical considerations.
Lawyers Mut. Liab. Ins. Co. v. Nexsen, Pruet, Jacobs & Pollard, 112 N.C. App. 353,
356, 435 S.E.2d 571, 573 (1993) (citation omitted).
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“A court will not have abused its discretion in failing to consider each
enumerated factor.” Id. at 357, 435 S.E.2d at 574.
Further, in determining whether to grant a stay, it is not necessary that the trial court find that all factors positively support a stay, as long as it is able to conclude that (1) a substantial injustice would result if the trial court denied the stay, (2) the stay is warranted by those factors present, and (3) the alternative forum is convenient, reasonable, and fair.
Wachovia Bank v. Harbinger Capital Partners Master Fund I, Ltd., 201 N.C. App.
507, 520, 687 S.E.2d 487, 495 (2009) (citation omitted).
Millar argues that the trial court did not make a finding of fact that Shaw
would suffer a substantial injustice if the trial court denied the stay. However, the
trial court is not required to make written findings of fact and conclusions of law,
rather, these are necessary on motions only when requested by a party. See N.C.
Gen. Stat. § 1A-1, Rule 52(a)(2) (2019). Here, Millar made no specific request for
findings of fact or conclusions of law, therefore, the trial court was not required to
find facts. See Allen v. Trust Co., 35 N.C. App. 267, 269, 241 S.E.2d 123, 125 (1978)
(holding that “absent a request for findings of fact to support his decision on a motion,
the judge is not required to find facts . . . and it is presumed that the [j]udge, upon
proper evidence, found facts to support this judgment.” (citation omitted)).
Here, there was sufficient evidence to support the trial court’s order granting
the motion to stay because the potential for inconsistent judgments from
simultaneous proceedings in two different states addressing the same issue could
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result in a substantial injustice. See Wachovia Bank, 201 N.C. App. at 520-21, 687
S.E.2d at 495-96. In the Georgia action, Shaw alleges that Delongy Stores breached
the Consignment Agreements in several respects, some of which may directly impact
this action. In addition, “the stay is warranted by [the Lawyers Mutual] factors[,]”
including: the nature of the case, the convenience of the witnesses, the availability of
compulsory process to produce witnesses, and the relative ease of access to sources of
proof. Id. at 521, 687 S.E.2d at 496.
Accordingly, the trial court did not totally abandon consideration of the
Lawyers Mutual factors and was able to conclude that a substantial injustice would
result if it denied the stay. See Wachovia Bank, 201 N.C. App. at 521, 687 S.E.2d at
496. Because the trial court did not make “a patently arbitrary decision, manifestly
unsupported by reason,” the trial court did not abuse its discretion when it granted
the motion to stay. Bryant & Assocs., LLC, 238 N.C. App. at 4, 767 S.E.2d at 90
(citation omitted). Accordingly, we affirm the trial court’s order granting the motion
to stay.
III. Motions to Dismiss
Delongy Stores argues that the trial court erred when it denied the motions to
dismiss the third-party complaint for improper venue and for lack of personal
jurisdiction. We agree.
A. Improper Venue
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“A trial court’s interpretation of a forum selection clause is an issue of law that
is reviewed de novo.” US Chem. Storage, LLC v. Berto Constr., Inc., 253 N.C. App.
378, 382, 800 S.E.2d 716, 720 (2017) (citation omitted). “Under a de novo review, the
court considers the matter anew and freely substitutes its own judgment for that of
the lower tribunal.” Sony Ericsson Mobile Communications USA, Inc. v. Agere
Systems, Inc., 195 N.C. App. 577, 579, 672 S.E.2d 763, 765 (2009) (citation and
quotation marks omitted).
In general, a court interprets a contract according to the intent of the parties to the contract. Further, the Supreme Court of North Carolina has held that where parties to a contract have agreed that a given jurisdiction’s substantive law shall govern the interpretation of the contract, such a contractual provision will be given effect.
Szymczyk v. Signs Now Corp., 168 N.C. App. 182, 186, 606 S.E.2d 728, 732 (2005)
(citations and quotation marks omitted). Specifically, when a contract contains a
mandatory forum selection clause, it “vest[s] exclusive jurisdiction” in a particular
state or court. US Chem. Storage, 253 N.C. App. at 383, 800 S.E.2d at 720; see also
S&S Family Bus. Corp. v. Clean Juice Franchising, LLC, No. COA19-264, 2020 WL
549627, *3 (N.C. Ct. App. Feb. 4, 2020) (unpublished) (“A mandatory forum selection
clause vests exclusive jurisdiction in a particular state or court.”).
Delongy Stores and Shaw stipulated that the forum selection clause at issue
here is mandatory. In fact, the forum selection clause explicitly states that the
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Consignment Agreements are subject to “the laws of the State of Georgia.” Thus, we
apply Georgia law to determine whether the forum selection clause is valid.
Georgia courts have adopted the United States Supreme Court’s ruling in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 SC 1907, 32 LE2d 513 (1972), that forum selection clauses are prima facie valid and should be enforced unless the opposing party shows that enforcement would be unreasonable under the circumstances.
Equity Tr. Co. v. Jones, 339 Ga. App. 11, 11, 792 S.E.2d 458, 459 (2016) (citation and
To invalidate a mandatory forum selection clause under Georgia law,
the opposing party must show that trial in the chosen forum will be so inconvenient that he will, for all practical purposes, be deprived of his day in court. A freely negotiated agreement should be upheld absent a compelling reason such as fraud, undue influence, or overweening bargaining power.
OFC Capital v. Colonial Distrib.’s, 285 Ga. App. 815, 817, 648 S.E.2d 140, 142 (2007)
(emphasis added) (citation and quotation marks omitted).
Shaw contends that enforcement of the forum selection clause may increase
the risk of inconsistent outcomes. However, Shaw has not demonstrated that trial in
Georgia would be “so inconvenient” that it will “be deprived of its day in court.” Id.
at 817, 648 S.E.2d at 142 (citation and quotation marks omitted). In fact, Shaw is
having its day in court as evidenced by the lawsuit that it filed against Delongy Stores
in Georgia. Moreover, Shaw has failed to allege or demonstrate a compelling reason
that the forum selection clause, which establishes venue in Shaw’s home state, was
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the result of “fraud, undue influence, or overweening bargaining power.” Id. at 817,
648 S.E.2d at 142 (citation and quotation marks omitted). We note that not only did
Shaw draft the forum selection clause, but has also relied on its enforceability in the
pending Georgia case. Specifically, Shaw previously stated that the “contractual
forum selection clause is enforceable and is mandatory and that any dispute between
Shaw and the Delongy [Stores] arising out of the Consignment Agreement must be
litigated in the Putnam County, Georgia Superior Court.” (emphasis added).
Based on the record, Shaw has failed to demonstrate that the forum selection
clause is unenforceable. Thus, the trial court erred when it failed to enforce the
mandatory forum selection clause and granted Delongy Stores’ motion to dismiss for
improper venue. Id. at 817, 648 S.E.2d at 142. We remand with instructions to enter
an order dismissing Shaw’s third-party complaint for improper venue.
B. Lack of Personal Jurisdiction
“When this Court reviews a decision as to personal jurisdiction, it considers
only whether the findings of fact by the trial court are supported by competent
evidence in the record; if so, this Court must affirm the order of the trial court.” Banc
of Am. Secs. LLC v. Evergreen Int’l Aviation, Inc., 169 N.C. App. 690, 694, 611 S.E.2d
179, 183 (2005) (citation and quotation marks omitted). “Competent evidence is
evidence that a reasonable mind might accept as adequate to support the finding.”
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City of Asheville v. Aly, 233 N.C. App. 620, 625, 757 S.E.2d 494, 499 (2014) (citation
omitted).
When a defendant challenges personal jurisdiction pursuant to Rule 12(b)(2),
a trial court may hold an evidentiary hearing including oral testimony or depositions or may decide the matter based on affidavits. . . . Of course, this procedure does not alleviate the plaintiff’s ultimate burden of proving personal jurisdiction at an evidentiary hearing or at trial by a preponderance of the evidence.
Bruggeman v. Meditrust Acquisition Co., 138 N.C. App. 612, 615, 532 S.E.2d 215, 217
(2000) (citations omitted). When “the trial court chooses to decide the motion based
on affidavits, the trial judge must determine the weight and sufficiency of the
evidence presented in the affidavits much as a juror.” Banc of Am. Secs., 169 N.C.
App. at 694, 611 S.E.2d at 183 (purgandum). It is not for this Court to “reweigh the
evidence presented to the trial court.” Don’t Do It Empire, LLC v. Tenntex, 246 N.C.
App. 46, 57, 782 S.E.2d 903, 910 (2016) (citation and quotation marks omitted).
When reviewing the issue of personal jurisdiction on appeal, this Court
“employs a two-step analysis.” Skinner v. Preferred Credit, 361 N.C. 114, 119, 638
S.E.2d 203, 208 (2006). “First, jurisdiction over the action must be authorized by
N.C.G.S. § 1-75.4, our state’s long-arm statute.” Id. at 119, 638 S.E.2d at 208 (citation
omitted). “Second, if the long-arm statute permits consideration of the action,
exercise of jurisdiction must not violate the Due Process Clause of the Fourteenth
Amendment to the U.S. Constitution.” Id. at 119, 638 S.E.2d at 208.
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“[N.C. Gen. Stat. §] 1-75.4 is commonly referred to as the ‘long-arm’ statute.”
Dillon v. Numismatic Funding Corp., 291 N.C. 674, 676, 231 S.E.2d 629, 630 (1977).
Specifically, a North Carolina court has personal jurisdiction “[i]n any action which
. . . [r]elates to goods, documents of title, or other things of value shipped from this
State by the plaintiff to the defendant on his order or direction[.]” N.C. Gen. Stat. §
1-75.4(5)(d) (2019). “Essentially, this section of the long-arm statute reaches
defendants who engage in commercial transactions with residents of this state.”
Skinner, 361 N.C. at 120, 638 S.E.2d at 209 (citing Johnston Cnty. v. R.N. Rouse &
Co. Inc., 331 N.C. 88, 95, 414 S.E.2d 30, 35 (1992) (describing N.C. Gen. Stat. § 1-
75.4(5) as “authoriz[ing] the courts of North Carolina to exercise jurisdiction over a
nonresident contracting within the state or contracting to perform services within the
state”)). As the third-party plaintiff, Shaw “has the burden of establishing prima
facie evidence that one of the statutory grounds [for personal jurisdiction] applies.”
Chapman v. Janko, U.S.A. Inc., 120 N.C. App. 371, 374, 462 S.E.2d 534, 536 (1995)
(citation omitted); see also Miller v. Szilagyi, 221 N.C. App. 79, 84-85, 726 S.E.2d 873,
878-79 (2012) (“[T]he plaintiff bears the burden of proving, by a preponderance of the
evidence, grounds for exercising personal jurisdiction over a defendant.” (citation
omitted)).
Here, Millar did not act “at the order or direction” of Delongy Stores, but rather
at the “order or direction” of Shaw. Pursuant to the Consignment Agreements,
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Delongy Stores “select[s] the inventory to be consigned to them” and Shaw is then
“responsible for approving the amount of inventory requested[.]” Once approved,
Shaw then “deliver[s] or cause[s] to be delivered” the selected inventory to Delongy
Stores. Further, there was evidence before the trial court that “since about 2012 . . .
[Millar] has always sent its invoices and its account statements directly to Shaw, and
Shaw has always paid those invoices and account statements for merchandise that
was shipped to [Delongy Stores].” The only goods “shipped from [North Carolina]”
were those items that Shaw contracted for and purchased from Millar, which Delongy
Stores previously requested from Shaw. Moreover, all of Delongy Stores’ orders and
directions to Shaw occurred in either Florida or Georgia, not North Carolina. See
Skinner, 361 N.C. at 120, 638 S.E.2d at 209 (finding N.C. Gen. Stat. § 1-75.4(5)(d) did
not confer personal jurisdiction over a nonresident defendant because “[t]here [was]
no direct contact between plaintiffs and the [nonresident defendant].”).
Although Shaw argues Delongy Stores ordered directly from Millar, there is no
competent evidence in the record to suggest that there was direct contact between
Millar and Delongy Stores. Rather, the only evidence in the record alleging direct
orders between Delongy Stores and Millar are conclusory statements in Shaw’s
answer and interrogatories. These general statements, without more, do not
demonstrate direct orders between Delongy Stores and Millar. Thus, Shaw, as the
third-party plaintiff, has failed “to establish itself within some ground for the exercise
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of personal jurisdiction” over Delongy Stores. Parker v. Pfeffer, ___ N.C. App. ___,
___, ___ S.E.2d ___, ___ (2020). Therefore, the trial court’s finding that N.C. Gen.
Stat. § 1-75.4(5)(d) applies here is not supported by competent evidence.
While the dissent asserts that Delongy Stores and Millar “dealt with each other
directly with relation to goods shipped from this State” and that this ought to be
“sufficient to maintain personal jurisdiction” under our long-arm statute, this
reasoning ignores the second operative portion of N.C. Gen. Stat. § 1-75.4(5)(d). In
fact, N.C. Gen. Stat. § 1-75.4(5)(d) requires both that the action relate to goods
shipped from our State and also that those goods were shipped to the defendant on
the defendant’s order or direction. The General Assembly could have applied this
long-arm provision to all transactions involving goods shipped from this State, but
instead chose narrower language. Accordingly, we must apply that plain language
and, here, there simply is no evidence to satisfy the second prong of N.C. Gen. Stat. §
1-75.4(5)(d).
Here, Shaw served as a consignment intermediary between Millar and Delongy
Stores, and there is insufficient evidence of direct contact or of a contractual
agreement between Millar and Delongy Stores to confer jurisdiction under N.C. Gen.
Stat. § 1-75.4(5)(d). Even assuming Shaw “caused [Millar] to deliver[]” the selected
inventory shipments directly to Delongy Stores, this is insufficient for purposes of
N.C. Gen. Stat. § 1-75.4(5)(d) because Delongy Stores did not directly order from
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Millar. See Robbins v. Ingham, 179 N.C. App. 764, 769, 635 S.E.2d 610, 614-15 (2006)
(refusing to impute the affirmative actions of an intermediary to a third-party
defendant for purposes of establishing personal jurisdiction under N.C. Gen. Stat. §
1-75.4(5)(d)). Therefore, “[b]ecause [Shaw] has failed to meet [its] burden of proving
a statutory basis for personal jurisdiction, we need not conduct a due process inquiry
because any further inquiry will be fruitless.” Parker, ___ N.C. App. at ___, ___ S.E.2d
at ___; see also Skinner, 361 N.C. at 120, 638 S.E.2d at 209 (ending its personal
jurisdiction analysis after concluding that “[a]lthough [N.C. Gen. Stat. § 1-
75.4(5)(d)’s] grant of jurisdiction is far-reaching, the transactions in this case do not
fall within its grasp.”).
Thus, we remand with instructions to enter an order dismissing the third-party
complaint for lack of personal jurisdiction.
Conclusion
For the foregoing reasons, we dismiss Delongy Stores’ appeal on the issue of
attorneys’ fees as interlocutory. We affirm the trial court’s order granting the motion
to stay, and remand with instructions to enter an order dismissing Shaw’s complaint
for improper venue and lack of personal jurisdiction.
DISMISSED IN PART; AFFIRMED IN PART; AND REMANDED IN PART.
Judge DIETZ concurs.
Judge ARROWOOD concurs in part, dissents in part.
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ARROWOOD, Judge, concurs in part and dissents in part.
I concur in the portion of the majority opinion that affirms the trial court’s
order granting the motion to stay. I further agree that the forum selection clause
under the contract is valid, however, I would vacate the order denying dismissal with
respect to that issue and remand this matter to the trial court to enter an order
making appropriate findings of fact with respect to the issue of whether there are
appropriate reasons under Georgia law as constrained by United States Supreme
Court precedent for North Carolina to refuse to honor that provision of the contract.
I respectfully dissent from the portion of the majority opinion holding the trial court
lacked personal jurisdiction over the third-party defendants.
I. Venue
Although the cases which address contract forum selection clauses normally
deal with both jurisdiction and venue and the two issues are sometimes “blurred,” the
two inquiries are different. ITS Leasing, Inc. v. RAM DOG Enterprises, LLC, 206
N.C. App. 572, 578, 696 S.E.2d 880, 884 (2010) (citing Perkins v. CCH Computax, Inc.,
333 N.C. 140, 144, 423 S.E.2d 780, 783 (1992)). Generally, “courts no longer view
forum selection clauses as ousting the courts of their jurisdiction[,]” but instead “allow
a court to refuse to exercise that jurisdiction in recognition of the parties’ choice of a
different forum.” Perkins v. CCH Computax, Inc., 333 N.C. 140, 143, 423 S.E.2d 780,
782 (1992). PETER MILLAR, LLC V. SHAW’S MENSWEAR INC.
ARROWOOD, J., concurring in part, dissenting in part
In this case, the Consignment Agreements between Delongy and Shaw include
the following forum selection clause, in relevant part:
This Agreement will be governed by and construed in accordance with the laws of the State of Georgia. The parties agree that the situs and venue of any suit commenced under this contract shall be Putnam County, Georgia. The parties further agree that any negotiations on transactions affecting this contract and the entry into this contract shall be deemed to have taken place in Putnam County, Eatonton, Georgia. [Delongy Stores] hereby consents to the personal jurisdiction of the courts of Putnam County, Georgia, and agrees to acknowledge service of any suit filed against [Delongy Stores] by [Shaw] in Putnam County, Georgia.
As the clause makes apparent, although the venue “shall be” designated in Georgia,
the matter of jurisdiction is separate.
Defendant concedes that the forum selection clause is enforceable, however,
they argue that they can avoid its enforcement by showing that it is “unfair or
unreasonable.” See Perkins, 333 N.C. at 146, 423 S.E.2d at 784 (citing M/S Bremen
v. Zapata Off-Shore Co., 407 U.S. 1, 32 L. Ed. 2d 513 (1972)).
I believe that the trial court needs to make findings of fact and conclusions of
law with respect to this enforceability under the standard for enforceability set forth
by the United States Supreme Court in Bremen in order for us to appropriately review
the same. I do not believe that we, as a matter of law, can make the determination
reached by the majority that the forum selection clause is enforceable without
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findings from the trial court under the test established by Bremen as to whether it
would be unfair or unreasonable to enforce based upon the facts of this case.
Therefore, I would hold that the trial court erred in failing to make appropriate
findings of fact and conclusions of law with respect to why the forum selection clause
should not be enforced. I would vacate that portion of the order and remand this
issue to the trial court to make the appropriate finding and conclusion.
II. Personal Jurisdiction
The majority concludes that the forum selection clause is mandatory and vests
exclusive jurisdiction in Georgia, in addition to asserting that there was not
competent evidence to establish grounds for the exercise of personal jurisdiction
under the long-arm statute. I respectfully disagree with the majority’s statutory
analysis and application of our caselaw.
As previously noted, the issues of venue and jurisdiction require separate
analyses in the context of forum selection clauses. The general rule is when a
jurisdiction is specified in a provision of contract, the provision generally will not be
enforced as a mandatory selection clause with respect to jurisdiction without some
further language that indicates the parties’ intent to make jurisdiction exclusive.
Printing Servs. of Greensboro, Inc. v. Am. Capital Grp., Inc., 180 N.C. App. 70, 74,
637 S.E.2d 230, 232 (2006), aff’d, 361 N.C. 347, 643 S.E.2d 586 (2007). Indeed,
mandatory forum selection clauses recognized by our appellate courts have contained
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words such as “exclusive” or “sole” or “only” which indicate that the contracting
parties intended to make jurisdiction exclusive. Id. This Court has not interpreted
the phrase “shall be” as sufficient to create a mandatory forum selection clause. R.H.
Donnelley Inc. v. Embarq Corp., 228 N.C. App. 568, 749 S.E.2d. 112, 2013 WL
4005261, *3 (2013) (unpublished) (citing Mark Grp. Int’l, Inc. v. Still, 151 N.C. App.
565, 568, 566 S.E.2d 160, 162 (2002); Cable Tel Servs., Inc. v. Overland Contr’g, Inc.,
154 N.C. App. 639, 645, 574 S.E.2d 31, 35 (2002)).
In this case, the forum selection clause states that the “situs and venue of any
suit commenced under this contract shall be Putnam County, Georgia[,]” and goes on
to acknowledge that Delongy Stores “consents to the personal jurisdiction of the
courts of Putnam County, Georgia[.]” While this certainly allows Georgia courts to
exercise jurisdiction over Delongy Stores, it does not include language that indicates
that the parties intended to make jurisdiction exclusive, nor does it preclude the
exercise of jurisdiction in North Carolina.
In examining whether a non-resident defendant is subject to personal
jurisdiction in our courts, we engage in a two-step analysis. Beem USA Ltd.-Liab.
Ltd. P’ship v. Grax Consulting LLC, 373 N.C. 297, 302, 838 S.E.2d 158, 161 (2020)
(citing Skinner v. Preferred Credit, 361 N.C. 114, 119, 638 S.E.2d 203, 208 (2006)).
First, jurisdiction over the defendant must be authorized by N.C. Gen. Stat. § 1-75.4—
North Carolina’s long-arm statute. Id. Second, “if the long-arm statute permits
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consideration of the action, exercise of jurisdiction must not violate the Due Process
Clause of the Fourteenth Amendment to the U.S. Constitution.” Id. (quotation marks
A. The Long-Arm Statute
This Court has held that “[w]hile choice of law clauses are not determinative
of personal jurisdiction, they express the intention of the parties and are a factor in
determining whether minimum contacts exist and due process was met.” Banc of
Am. Secs. LLC v. Evergreen Int’l Aviation, Inc., 169 N.C. App. 690, 700, 611 S.E.2d
179, 186 (2005) (internal quotation marks and citation omitted). Thus, while we must
consider this clause in our due process analysis, it does not, standing alone, operate
to defeat personal jurisdiction over third-party defendants. R.H. Donnelley Inc., 2013
WL 4005261 at *3 (citing Banc of Am. Secs. LLC, 169 N.C. App. at 700, 611 S.E.2d at
186).
In this case, I would hold that there is statutory authority under N.C. Gen.
Stat. § 1-75.4(5)(d). A North Carolina court has personal jurisdiction “[i]n any action
which . . . [r]elates to goods, documents of title, or other things of value shipped from
this State by the plaintiff to the defendant on his order or direction.” N.C. Gen. Stat.
§ 1-75.4(5)(d) (2019). “Essentially, this section of the long-arm statute reaches
defendants who engage in commercial transactions with residents of this [S]tate.”
Skinner, 361 N.C. at 120, 638 S.E.2d at 209.
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North Carolina’s long-arm statute
is liberally construed to find personal jurisdiction over nonresident defendants to the full extent allowed by due process. Accordingly, when evaluating the existence of personal jurisdiction pursuant to [this statute], the question of statutory authorization collapses into the question of whether [the defendant] has the minimum contacts with North Carolina necessary to meet the requirements of due process.
Lulla v. Effective Minds, LLC, 184 N.C. App. 274, 277, 646 S.E.2d 129, 132 (2007)
(citation omitted).
Although the majority seeks to engage in a plain language analysis of the long-
arm statute, I would adhere to the liberal construction of the long-arm statute in
accordance with our precedent. I am concerned by the potential implications of the
majority’s holding. By narrowly interpreting the long-arm statute, the majority
opinion effectively creates a loophole to allow individuals and corporations to shield
themselves from the exercise of personal jurisdiction in North Carolina by conducting
business through an intermediary. Although I do not seek to apply the long-arm
statute to all transactions involving goods shipped from this State, as the majority
suggests, I believe the facts of this case, specifically the intertwined nature of the
business relationships and the knowledge of Delongy Stores that it was ordering
goods from a North Carolina vendor, require a holding that the third-party
defendants are subject to the jurisdiction of North Carolina courts. While the facts
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in this case are unique in that the North Carolina entity that sold and shipped the
goods is not seeking to invoke jurisdiction against the ultimate recipient of those
goods, because they are suing a third-party to recover for those goods, I believe that
this provision of the long-arm statute is met and that jurisdiction lies against the
third-party defendants to the extent that it is not violative of due process.
I further dissent from the majority’s holding that there was insufficient
evidence to support the trial court’s order denying the motion to dismiss. Under N.C.
Gen. Stat. § 1A-1, Rule 52(a)(2), the trial judge need not make findings of fact and
conclusions of law when making a decision on a motion unless they are requested by
a party or required by Rule 41(b) which is not applicable here. Fungaroli v.
Fungaroli, 51 N.C. App. 363, 367, 276 S.E.2d 521, 524 (1981). When the record
contains no findings of fact, “ ‘[i]t is presumed . . . that the court on proper evidence
found facts to support its judgment.’ ” Id. (quoting Sherwood v. Sherwood, 29 N.C.
App. 112, 113-14, 223 S.E.2d 509, 510-11 (1976)). On review, this Court is “not free
to revisit questions of credibility or weight that have already been decided by the trial
court.” Banc of Am. Secs. LLC, 169 N.C. App. at 695, 611 S.E.2d at 183.
In this case, as in Fungaroli and Banc of America Securities LLC, the record
contains no indication that the parties requested that the trial judge make specific
findings of fact, nor did the order contain any findings of fact. Accordingly, we must
presume that the trial judge made factual findings sufficient to support ruling in
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favor of Shaw. It is this Court’s task to review the record to determine whether there
is any evidence to support the trial court’s conclusion that North Carolina courts may
exercise jurisdiction over Delongy Stores without violating Delongy Stores’ due
process rights.
The record reflects that the third-party defendants Delongy Stores ordered
merchandise directly from plaintiff, Millar, who then shipped the merchandise from
North Carolina. The majority’s observation that defendant Shaw’s received “invoices
and account statements for every bit of merchandise that was shipped,” ignores the
fact that Delongy Stores and Millar dealt with each other directly with relation to
goods shipped from this State. Although defendant Shaw was primarily involved in
the overall business arrangement, the alleged “over-orders” by Delongy Stores and
the direct transactions between Delongy Stores and Millar are in my opinion
sufficient to maintain personal jurisdiction over Delongy Stores in this matter. The
existence of Shaw as an intermediary does not change the fact that Delongy Stores
has availed themselves of the privilege of purchasing and receiving goods from this
State.
B. Due Process
The second step under N.C. Gen. Stat. § 1-75.4 is whether the exercise of
personal jurisdiction by North Carolina courts violates due process of law. “By the
enactment of [N.C. Gen. Stat. §] 1-75.4(1)(d), it is apparent that the General Assembly
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intended to make available to the North Carolina courts the full jurisdictional powers
permissible under federal due process.” Dillon v. Funding Corp., 291 N.C. 674, 676,
231 S.E.2d 629, 630 (1977).
To satisfy the requirements of the due process clause, there must exist “certain
minimum contacts [between the non-resident defendant and the forum] such that the
maintenance of the suit does not offend ‘traditional notions of fair play and
substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L.
Ed. 95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 283
(1940)). In each case, there must be some act by which the defendant purposefully
avails themselves of the privilege of conducting activities within the forum state, thus
invoking the benefits and protections of its laws; the unilateral activity within the
forum state of others who claim some relationship with a non-resident defendant will
not suffice. Hanson v. Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 1298 (1958). This
relationship between the defendant and the forum must be “such that [they] should
reasonably anticipate being haled into court there.” Tom Togs, Inc. v. Ben Elias
Indus. Corp., 318 N.C. 361, 365-66, 348 S.E.2d 782, 786 (1986) (internal quotation
marks and citation omitted). Following the mandate of the United States Supreme
Court, our courts have rejected any per se rule of long-arm jurisdiction. Buying Group
v. Coleman, 296 N.C. 510, 251 S.E.2d 610 (1979).
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Although a contractual relationship between a North Carolina resident and an
out-of-state party alone does not automatically establish the necessary minimum
contacts with this State, nevertheless, a single contract may be a sufficient basis for
the exercise of personal jurisdiction if it has a substantial connection with this State.
Tom Togs, 318 N.C. at 367, 348 S.E.2d at 786. In Tom Togs, our Supreme Court
analyzed whether a contract between a North Carolina resident plaintiff and a non-
resident defendant for the sale of shirts presented a substantial connection with this
State. The defendant in Tom Togs was aware that the plaintiff was a North Carolina
resident, and that the shirts were to be shipped from this State. Id., 318 N.C. at 367,
348 S.E.2d at 787. Accordingly, our Supreme Court held that the contract and
business dealings between defendant and plaintiff created a “substantial connection”
with this State.
Here, as in Tom Togs, third-party defendants Delongy Stores were aware that
plaintiff Millar is a North Carolina resident, and each party maintained a series of
business transactions involving the shipment of clothing from a North Carolina
resident plaintiff to a non-resident defendant. Although there was not a written
contract between Delongy Stores and Millar, the nature of the business transactions
and the ongoing business relationship between the plaintiff and the third-party
defendants which resulted in the alleged debt that plaintiff is suing defendant Shaw
over in my opinion presents a “substantial connection” with this State.
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Accordingly, both steps of analysis under the North Carolina long-arm statute
are satisfied, and the exercise of personal jurisdiction over Delongy Stores does not
violate due process requirements. Therefore, I would hold that the trial court did not
err in denying the third-party defendants’ motion to dismiss for lack of personal
jurisdiction.
III. Conclusion
I would affirm the order denying the motion to dismiss for lack of jurisdiction,
vacate the order denying the motion to dismiss for improper venue and remand for
the trial court to make findings of fact with respect to whether third-party plaintiff
can meet the standard established under Bremen to circumvent the forum selection
clause under the contract between Shaw and Delongy Stores. While Georgia law
applies, it is constrained by the overarching mandate of the United States Supreme
Court with respect to the enforcement of forum selection clauses.
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