IN THE SUPREME COURT OF NORTH CAROLINA
2022-NCSC-81
No. 181A21
Filed 17 June 2022
TOSHIBA GLOBAL COMMERCE SOLUTIONS, INC.
v. SMART & FINAL STORES LLC
Appeal pursuant to N.C.G.S. § 7A-27(a)(3) from an order and opinion denying
defendant’s motion to dismiss for lack of personal jurisdiction entered on
23 December 2020 by Judge Adam M. Conrad, Special Superior Court Judge for
Complex Business Cases, in Superior Court, Durham County, after the case was
designated a mandatory complex business case by the Chief Justice pursuant to
N.C.G.S. § 7A-45.4(a). Heard in the Supreme Court on 21 March 2022.
Robinson, Bradshaw & Hinson, P.A., by Erik R. Zimmerman, Edward F. Hennessey IV, Matthew W. Sawchak, and Benjamin C. DeCelle; and Kenneth B. Hammer, for plaintiff-appellee.
Ellis & Winters LLP, by Paul K. Sun Jr. and Kelly Margolis Dagger, for defendant-appellant.
BARRINGER, Justice.
¶1 In this matter, we must consider whether the trial court erred by denying a
nonresident defendant’s motion to dismiss for lack of personal jurisdiction. Plaintiff
Toshiba Global Commerce Solutions, Inc. (Toshiba) is based in Durham, North
Carolina, and brought this action against Smart & Final Stores LLC (Smart & Final) TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
Opinion of the Court
for breach of contract and related claims. Smart & Final, a California company that
operated warehouse-style grocery stores in the western United States, contacted
Toshiba during its search for a service provider to maintain and repair the point-of-
sale equipment that Smart & Final uses at its stores. In March 2019, negotiations
between the parties resulted in the Master Maintenance Services Agreement
(Services Agreement), in which Toshiba agreed to provide maintenance and repair
services for point-of-sale equipment at all Smart & Final stores for three years.
According to the complaint, Smart & Final refused to pay overage fees as required by
the Services Agreement and terminated the Services Agreement without cause in
April 2020. As addressed in more detail herein, on the record before us and claims
alleged, the Due Process Clause of the Fourteenth Amendment does not preclude the
courts of this State from entering a judgment binding on Smart & Final. Therefore,
we conclude that the trial court did not err by denying Smart & Final’s motion to
dismiss for lack of personal jurisdiction.
I. Personal Jurisdiction
¶2 “The Fourteenth Amendment’s Due Process Clause limits a state court’s power
to exercise jurisdiction over a defendant.” Ford Motor Co. v. Mont. Eighth Jud. Dist.
Ct., 141 S. Ct. 1017, 1024 (2021). Specifically, “[t]he Due Process Clause protects an
individual’s liberty interest in not being subject to the binding judgments of a forum TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
with which he has established no meaningful contacts, ties, or relations.” Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 471–72 (1985) (cleaned up).
¶3 As articulated in International Shoe Co. v. Washington, 326 U.S. 310 (1945), a
defendant who is not subject to general jurisdiction in a forum state or present in the
forum state must “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.” Id. at 316 (cleaned up). This jurisdiction—known as specific
jurisdiction—“exists when the cause of action arises from or is related to defendant’s
contacts with the forum.” Skinner v. Preferred Credit, 361 N.C. 114, 122 (2006). The
relationship with the forum “must arise out of contacts that the ‘defendant himself”
creates with the forum [s]tate.” Walden v. Fiore, 571 U.S. 277, 284 (2014) (quoting
Burger King, 471 U.S. at 475). While the quality and nature of defendant’s activity
with the forum state may vary, “it is essential in each case that there be some act by
which the defendant purposefully avails itself of the privilege of conducting activities
within the forum [s]tate, thus invoking the benefits and protections of its laws.”
Hanson v. Denckla, 357 U.S. 235, 253 (1958). Thus, consistent with the foregoing, the
Supreme Court of the United States has recognized that jurisdiction exists without
offending the Due Process Clause when “the suit was based on a contract which had
substantial connection with that [s]tate.” McGee v. Int’l Life Ins. Co., 355 U.S. 220,
223 (1957). TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
II. Analysis
¶4 Toshiba initiated this action against Smart & Final in Superior Court, Durham
County, North Carolina, alleging breach of the Services Agreement and related
claims. Smart & Final moved to dismiss the complaint for lack of personal jurisdiction
pursuant to Rule 12(b)(2) of the North Carolina Rules of Civil Procedure. Both parties
submitted affidavits and exhibits in support of and opposition to Smart & Final’s
motion, and a hearing was held, but testimony was not taken at the hearing.
¶5 In this context, when the parties have submitted affidavits and exhibits but no
evidentiary hearing is held, the trial court must determine the weight and sufficiency
of the evidence before it. See N.C.G.S. § 1A-1, Rule 43(e) (2021); Banc of Am. Sec. LLC
v. Evergreen Int’l Aviation, Inc., 169 N.C. App. 690, 694 (2005). However, pursuant to
Rule 52(a)(2) of the North Carolina Rules of Civil Procedure, the trial court need not
make specific findings of fact in support of its order unless requested by a party.
N.C.G.S. § 1A-1, Rule 52(a)(2) (2021). If in deciding the motion the trial court makes
findings of fact, they are conclusive on appeal when unchallenged or supported by
competent evidence even when there is a conflict in the evidence. See, e.g., Morse v.
Curtis, 276 N.C. 371, 378 (1970) (“We recognize the often-repeated rule that findings
of fact by a trial judge are conclusive when supported by competent evidence, even
when there is [a] conflict in the evidence, but an exception to a finding of fact not
supported by competent evidence must be sustained.”); Fungaroli v. Fungaroli, 51 TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
N.C. App. 363, 367 (1981) (applying this rule to the Court of Appeals’ review of a trial
court’s order denying a motion to dismiss for lack of personal jurisdiction).
¶6 In this matter, the trial court found facts and ultimately determined that the
Services Agreement had “a substantial connection with North Carolina.”1 Although
Smart & Final makes arguments concerning the competency of evidence supporting
some portions of the trial court’s findings, Smart & Final has not challenged the
following findings of fact2:
4. Based in Durham, North Carolina, Toshiba makes and sells point-of-sale products used by retailers— for example, scanners, monitors, and related checkout devices. It also offers support services for its products and those made by others.
5. Smart & Final is a California company that operates a chain of warehouse-style grocery stores in the western United States. Until recently, one of its subsidiaries operated restaurant supply and wholesale food stores in the same region.
6. In late 2017, Smart & Final began searching for a service provider to maintain and repair point-of-sale equipment at its stores. One of the vendors it contacted was Toshiba. The parties promptly signed a nondisclosure
1 Since Smart & Final does not advance an argument on appeal concerning North Carolina’s long-arm statute, N.C.G.S. § 1-75.4 (2021), we do not address the long-arm statute herein. 2 The trial court listed some of the following findings of fact under the subheading
“Conclusions of Law.” However, this Court can and should disregard the trial court’s labels when necessary to apply the appropriate standard of review. In re M.C., 374 N.C. 882, 890 (2020). Therefore, to properly review the issue before us, we have listed the trial court’s unchallenged findings of fact even if they appear in the paragraphs following the subheading “Conclusions of Law.” Further, for readability, the trial court’s citations to the record and caselaw have been omitted. TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
agreement, notable only because it lists Toshiba’s North Carolina address at the top. Over the next few months, Toshiba sent pitch materials and a formal proposal for a mix of products and services. Toshiba touted its technology (hardware and software), national presence (a fleet of technician vans coupled with a network of stocking locations to house inventory), and support infrastructure (a central repair depot and an “expert staff of trained personnel . . . at our corporate HQ” in North Carolina). Ultimately, though, Smart & Final went with a different vendor.
7. Evidently, that relationship didn’t work out, and soon Smart & Final was looking for a new vendor. It reached out to Toshiba a second time and requested another proposal. Most of the negotiations took place via e- mail and telephone between Smart & Final representatives in California and Toshiba representatives in California and Texas. There was also at least one in-person meeting at Smart & Final’s California headquarters.
8. This time, the negotiations were fruitful, producing a services agreement in March 2019. In a nutshell, Toshiba agreed to provide maintenance and repair services for point-of-sale equipment at all Smart & Final stores for three years. Smart & Final could renew the agreement for additional one-year terms with written notice to Toshiba’s North Carolina headquarters. A choice- of-law provision states that New York law governs the agreement.
9. Smart & Final selected two service options: “On- Site Repair” and “Advanced Exchange Plus.” On-Site Repair means just what it says: a Toshiba technician would travel to a given store and try to repair defective equipment on site. Advanced Exchange Plus, on the other hand, is a replacement service. This option calls for the technician to replace the defective part with a working unit taken from inventory called seed stock. Although Smart & Final could have chosen to own and maintain the seed stock itself, it TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
shifted that burden to Toshiba. Toshiba also took responsibility for installing replacement parts and for “the return of the [defective] Product back to [its] depot.”
10. Both service options are geared toward addressing problems as they arise. Determined “to operate [its] stores without interruption,” Smart & Final put a premium on speed. The agreement specifies response times and performance goals typically based on same-day or next-day service. Along with making its technicians available seven days a week, Toshiba agreed to “provide an infrastructure and support structure to meet” its obligations.
11. These requirements are reflected in the price. Attachment A details the prices for repair and replacement services for dozens of products, based in part on estimates of the amount of seed stock needed, the expected response time, and the number of anticipated service calls. It also states various pricing assumptions, including that Toshiba would own the seed stock and “image/configure units during the receive and repair process at our Depot.” For the Advanced Exchange Plus option, the price sheet assumes that a “technician will meet [the] part on-site that is shipped from the Toshiba depot,” noting that the replacement “part for [a] failed unit [would be] available under Next Business Day support.”
12. Although the agreement doesn’t say so, the “depot” is part of Toshiba’s “Tricenter operations hub” in North Carolina. This is where Toshiba managed the seed stock and repaired failed equipment throughout its relationship with Smart & Final. Before the “go live date” for the services agreement, employees at the depot estimated the seed stock needed to get started, procured it (because Smart & Final used non-Toshiba equipment), and then shipped it to field technicians and stocking locations. As time went by, the depot received and repaired equipment that technicians could not fix on site. The depot then returned these repaired items to the seed stock or, if TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
a part was beyond repair, replenished the stock with new equipment.
13. Over the course of their relationship, Toshiba handled about 7,200 repair tickets for Smart & Final. Some involved purely on-site repairs. Many others required support from Toshiba’s depot in North Carolina. The depot recorded more than 4,200 shipments of parts to replenish inventory and more than 2,600 repairs for parts removed from Smart & Final stores—about seven percent of the repairs and replenishments performed for all Toshiba customers.
14. Less than a year into their relationship, the parties split. Toshiba alleges that the equipment covered by the agreement failed at rates far higher than Smart & Final predicted during negotiations, triggering hefty overage fees. As alleged, Smart & Final refused to pay and then terminated the agreement without cause in April 2020, more than two years before its scheduled expiration. Toshiba sued for breach of contract and related claims.
....
26. . . . Smart & Final initiated contact with a resident of this State and created a continuing relationship involving services that were performed both within and outside North Carolina.
29. Smart & Final was well aware when it contacted representatives of Toshiba that it was soliciting business from a North Carolina-based entity. The nondisclosure agreement that preceded negotiations has Toshiba’s address right at the top. . . . [T]he services agreement . . . requires all notices to go to Toshiba’s Durham headquarters. Furthermore, . . . Smart & Final is a large, sophisticated company deeply familiar with the market for point-of-sale products and services. At no point has Smart TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
& Final claimed surprise to find that Toshiba is based in North Carolina.
31. . . . In less than a year, Toshiba recorded thousands of shipments from its North Carolina base to maintain seed stock and replenish inventory, along with more than 2,600 repairs of parts taken from Smart & Final stores. This was not only a substantial part of the services performed for Smart & Final but also an appreciable part of the repair and replenishment services that Toshiba performed as a whole.
32. . . . Smart & Final had the option to keep its seed stock in house so that Toshiba would be responsible only for labor at affected stores. Instead, Smart & Final put the burden on Toshiba to create and maintain the seed stock and to provide the infrastructure needed for same- day and next-day services. . . .
33. . . . [I]t is undisputed that Smart & Final did not come to North Carolina or perform any services here.
35. . . . Toshiba actually performed a substantial portion of its [contractual] obligations in the State. . . .
36. Finally, in some rare cases, it may be unreasonable or inconvenient to exercise jurisdiction even when the defendant has the requisite minimum contacts with the forum. Smart & Final has not made that argument here.
¶7 Since these binding findings of fact are sufficient to support personal
jurisdiction over Smart & Final under this Court’s and the Supreme Court of the
United States’ precedent for the reasons addressed herein, we need not address TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
Smart & Final’s challenges to any other findings of fact or the arguments concerning
the disputed findings of fact.
¶8 Further, we do not find the standard of review determinative in this matter.
This Court has implicitly endorsed that whether personal jurisdiction exists is a
question of fact and that appellate courts do not review de novo a trial court’s
determination of personal jurisdiction but assess whether the determination is
supported by competent evidence in the record. Ponder v. Been, 275 N.C. App. 626,
636–37 (2020) (Stroud, J., dissenting), rev’d per curiam for reasons stated in the
dissent, 380 N.C. 570, 2022-NCSC-24; Eluhu v. Rosenhaus, 159 N.C. App. 355, 357
(2003), aff’d per curiam, 358 N.C. 372 (2004). “However, when the pertinent inquiry
on appeal is based on a question of law[,] . . . we conduct de novo review.” Da Silva v.
WakeMed, 375 N.C. 1, 5 (2020). Whether reviewing the finding of personal
jurisdiction for competent evidence or de novo, we hold that the trial court did not err
by denying the motion to dismiss for lack of personal jurisdiction because the Services
Agreement had a substantial connection with this State.
¶9 The Supreme Court of the United States recognized over half a century ago
that the Due Process Clause does not preclude a state court from entering a judgment
binding on a contracting party when “the suit was based on a contract which had
substantial connection with that [s]tate.” McGee, 355 U.S. at 223. McGee addressed
a state’s personal jurisdiction over a nonresident life insurance company. Id. at 221. TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
The nonresident life insurance company had no offices or agents in the forum state
and “ha[d] never solicited or done any insurance business in [the forum state] apart
from the policy involved [in the case].” Id. at 222. The Court concluded that the forum
state had jurisdiction over the nonresident life insurance company because the
contract had a substantial connection with the forum state. Id. at 223. “The contract
was delivered in [the forum state], the premiums were mailed from there and the
insured was a resident of that [s]tate when he died.” Id.
¶ 10 A few decades later, the Supreme Court of the United States in Burger King
revisited personal jurisdiction in the context of a contractual dispute. 471 U.S. at 463–
64. The Court explained that there is no mechanical test for determining jurisdiction
between contracting parties; it does not turn on “the place of contracting or of
performance,” id. at 478 (quoting Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316
(1943)), and “an individual’s contract with an out-of-state party alone can[not]
automatically establish sufficient minimum contacts in the other party’s home
forum,” id. at 478. Instead, “prior negotiations and contemplated future
consequences, along with the terms of the contract and the parties’ actual course of
dealing [are the factors] that must be evaluated in determining whether the
defendant purposefully established minimum contacts within the forum.” Id. at 479.
¶ 11 After analyzing the facts relating to these factors, the Supreme Court of the
United States in Burger King concluded that there was substantial record evidence TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
supporting the trial court’s determination “that the assertion of personal jurisdiction
over [the nonresident individual in the forum state] for the alleged breach of his
franchise agreement did not offend due process.” Id. at 478. Notably, the nonresident
individual had “no physical ties” to the forum state; he had never visited and did not
maintain offices in the forum state. Id. at 479. However, “th[e] franchise dispute grew
directly out of ‘a contract which had a substantial connection with that [s]tate.’ ” Id.
(quoting McGee, 355 U.S. at 223).
¶ 12 While this case differs in some respects from Burger King, our analysis of the
facts before us, as informed by applicable precedent, leads us to conclude that the
assertion of personal jurisdiction over Smart & Final for the alleged breach of the
Services Agreement and related claims does not offend due process. Specifically, as
discussed below, the undisputed facts concerning the “contemplated future
consequences,” “terms of the contract,” and “actual course of dealing” all support a
determination that the Services Agreement is a contract with a substantial
connection with the State of North Carolina.
¶ 13 First, Smart & Final intentionally solicited a company that it knew to be based
in North Carolina and sought a service provider to maintain and repair point-of-sale
equipment through that solicitation. Between late 2017 and early 2019, this
solicitation occurred twice. This is substantively analogous to Burger King where the
defendant challenging jurisdiction negotiated with an out-of-state corporation and TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
such negotiations were not for a one-off transaction but for a “long-term franchise.”
Id. at 479. The Burger King defendant “[e]schew[ed] the option of operating an
independent local enterprise” and pursued a contract with “the manifold benefits that
would derive from affiliation with a nationwide organization.” Id. at 479–80. While
the relationship between the parties in this case is not of franchisor and franchisee
as in Burger King, Smart & Final contacted a company based in North Carolina to
provide ongoing services in lieu of servicing its point-of-sale equipment itself. The
sought relationship, thus, was not a one-off transaction, such as a one-time purchase
of goods, but a contractual relationship sought by Smart & Final knowing that
Toshiba was based in North Carolina.
¶ 14 Second, Smart & Final and Toshiba did enter into a contract, the Services
Agreement, in March 2019. In that contract, Toshiba agreed to provide maintenance
and repair services for point-of-sale equipment at all Smart & Final stores for three
years. Smart & Final could also renew the Services Agreement for additional one-
year terms by sending a written notice to Toshiba’s North Carolina headquarters.
Thus, the contract and relationship formed because of Smart & Final’s solicitation of
a company based in North Carolina was not a one-off transaction but one involving
ongoing services for at least three years. While the Services Agreement does not
contemplate a twenty-year relationship like in Burger King, it nevertheless TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
established a substantial relationship that was contemplated to potentially extend
beyond three years.
¶ 15 Third, pursuant to the Services Agreement, Toshiba took responsibility for
installing replacement parts on-site from inventory shipped from the Toshiba depot
and for returning defective equipment back to Toshiba’s depot. During the course of
the parties’ relationship, the depot was located in North Carolina and was where
Toshiba managed and repaired the inventory. Employees at the depot in North
Carolina estimated the inventory needed to fulfill its responsibilities under the
Services Agreement, procured it, and shipped it to field technicians and stocking
locations. Thereafter, the depot in North Carolina received and repaired defective
equipment that could not be fixed on-site and returned the repaired (or new)
equipment to field technicians and stocking locations. The depot in North Carolina
recorded “more than 4,200 shipments of parts to replenish inventory” and “more than
2,600 repairs for parts removed from Smart & Final stores.”
¶ 16 Fourth, the Services Agreement required that any written notice required
under the Services Agreement be directed to Toshiba’s office in North Carolina. As
summarized by Smart & Final in its brief, Smart & Final “gave notice, addressed to
Toshiba’s Durham office, that it was exercising its contractual right to terminate the
[Services] Agreement” on 1 April 2020. One month later, Toshiba sued for TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
nonpayment and contended that Smart & Final breached the Services Agreement “by
terminating [it] without a contractual basis to do so.”
¶ 17 Given the foregoing facts, the “contemplated future consequences” as reflected
in “the terms of the contract” involved Toshiba maintaining a depot to meet its
contractual obligations. Burger King, 471 U.S. at 479. Furthermore, “the parties’
actual course of dealing” showed that Toshiba used a depot in North Carolina to meet
its contractual obligations by performing a substantial number of repairs at and
shipments from the depot. Id. On average, there were over seven repairs a day at the
depot in North Carolina and over eleven shipments a day from the depot in North
Carolina. The “terms of the contract” also dictated that any written notice required
by the Services Agreement be sent to Toshiba’s office in North Carolina, and “the
parties’ actual course of dealing” showed that Smart & Final sent written notice to
Toshiba in North Carolina to terminate the Services Agreement. These undisputed
facts concerning the “contemplated future consequences,” “terms of the contract,” and
“actual course of dealing” all support a determination that the Services Agreement is
a contract with a substantial connection with the State of North Carolina.
¶ 18 Nevertheless, Smart & Final argues that “[t]he only link between this case and
North Carolina is that [Smart & Final] contracted with Toshiba, which has its
corporate headquarters in North Carolina.” According to Smart & Final, Smart &
Final’s solicitation of a North Carolina-based company does not show purposeful TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
availment because Smart & Final did not reach into North Carolina by sending an
agent physically to North Carolina or by physically sending e-mails or letters to North
Carolina. In Smart & Final’s view, it merely directed contact to Toshiba, not North
Carolina. Smart & Final also contends that because the Services Agreement did not
require performance within North Carolina, Toshiba’s conduct in North Carolina to
fulfill its contractual obligations under the Services Agreement are unilateral acts
and not evidence of Smart & Final’s purposeful availment of the North Carolina
forum.
¶ 19 The contractual negotiations between Smart & Final and Toshiba did occur
outside of North Carolina, and Smart & Final did not come to or perform any services
in North Carolina. Thus, Smart & Final is correct that this case does not involve
contacts with North Carolina from Smart & Final’s agents being physically present
in North Carolina. Nevertheless, “physical presence in [North Carolina] is not a
prerequisite to jurisdiction.” Walden, 571 U.S. at 285. The defendants in both Burger
King and McGee had no physical presence in the forum state. Burger King, 471 U.S.
at 479; McGee, 355 U.S. at 222.
¶ 20 Additionally, the fact that contract negotiations and formation occurred
outside North Carolina does not foreclose jurisdiction in this case. In Burger King,
the defendant applied to Burger King’s Birmingham, Michigan, district office for a
franchise, dealt with this office daily, and ultimately executed a final agreement with TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
Burger King after negotiating with the district office and Burger King’s headquarters
in Florida. 471 U.S. at 466–67, 467 n.7. The Supreme Court of the United States
rejected the Court of Appeals reasoning that given the supervision and involvement
of the district office, the defendant reasonably believed that the Michigan office was
“the embodiment of Burger King,” and “he therefore had no reason to anticipate a
Burger King suit outside of Michigan.” Id. at 480 (cleaned up). Instead, the Supreme
Court concluded that there was “substantial record evidence indicating that [the
defendant] most certainly knew that he was affiliating himself with an enterprise
based primarily in Florida,” id. at 480, and determined that the assertion of personal
jurisdiction over the defendant in Florida “did not offend due process,” id. at 478.
¶ 21 In this matter, it is undisputed that Smart & Final solicited Toshiba agents
outside of North Carolina and knew at the time that Toshiba was based in North
Carolina. Like the Supreme Court of the United States, we therefore cannot dismiss
Smart & Final’s solicitation of Toshiba as irrelevant. Knowingly soliciting an entity
based in North Carolina for a multiyear contractual relationship is relevant to
whether a contract has a substantial connection with North Carolina. See Mucha v.
Wagner, 378 N.C. 167, 2021-NCSC-82, ¶ 11 (“In prior cases where this Court has
found a defendant’s one-time contacts sufficient to create specific personal
jurisdiction in North Carolina, the defendant knew or reasonably should have known TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
that by undertaking some action, the defendant was establishing a connection with
the State of North Carolina.”).
¶ 22 Also, nothing in McGee, Burger King, or this Court’s decision applying Burger
King in Tom Togs, Inc. v. Ben Elias Industries Corp., 318 N.C. 361 (1986), suggests
that unless the location of the act is dictated by the contract, performance of a
contractual obligation in the forum state is an irrelevant unilateral act. In McGee,
the Supreme Court of the United States in its analysis identified three facts
supporting its determination that the suit involved a contract with a substantial
connection to the forum. 355 U.S. at 223. One fact was that “the premiums were
mailed from [the forum state].” Id. In assessing the personal jurisdiction of the forum
state concerning a breach of a life insurance contract, McGee did not mention that the
contract required the insured to mail premium payments from the forum state. Thus,
McGee lends no support to defendant’s contention that the contract must require
performance in the forum state. Instead, McGee supports the notion that regular
contractual performance of a contractual obligation, like premium payments, in the
forum is relevant even if the location of the performance is not dictated by the
contract.
¶ 23 In Burger King, the Supreme Court of the United States, when assessing
whether there was record evidence to support that the defendant knew he was
affiliating with an entity from the forum state, recognized that the contract TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
documents did “emphasize that Burger King’s operations are conducted and
supervised from the [forum state] headquarters.” 471 U.S. at 480 (emphasis added).
However, the contract in Burger King did not require Burger King to conduct
operations from and supervise from its headquarters in the forum state. See id. at
488 (Stevens, J., dissenting) (identifying that the contract “required no performance
in the state of Florida” and held the district office “responsible for providing all of the
services due [defendant]”). Similarly, in Tom Togs, the nonresident defendant was
“aware that the contract was going to be substantially performed in [the forum
state],” but the Court’s opinion never indicates that performance was required to be
in the forum state. 318 N.C. at 367.
¶ 24 Finally, Smart & Final’s view of the Services Agreement’s connection to North
Carolina is contrary to the unchallenged findings of fact as analyzed previously. This
Court has recognized that “[a]lthough 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 in personam jurisdiction if it has a substantial
connection with this State.” Tom Togs, 318 N.C. at 367 (second emphasis omitted).
Here, the Services Agreement does have a substantial connection with North
Carolina, and Smart & Final has not argued that it would be unreasonable or
inconvenient for the courts of this State to exercise jurisdiction. Therefore, we hold TOSHIBA GLOB. COM. SOLS., INC. V. SMART & FINAL STORES LLC
that the trial court did not err by denying Smart & Final’s motion to dismiss for lack
of personal jurisdiction.
III. Conclusion
¶ 25 The Due Process Clause does not foreclose the exercise of personal jurisdiction
over Smart & Final by the courts of this State on Toshiba’s breach of contract and
related claims because the contract at issue has a substantial connection with this
State. Smart & Final has “certain minimum contacts with [this State] such that the
maintenance of the suit does not offend traditional notions of fair play and substantial
justice.” Int’l Shoe, 326 U.S. at 316 (cleaned up). Accordingly, we affirm the decision
of the trial court.
AFFIRMED.