X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The full case caption appears at the end of this opinion. HUNTER, Judge. The dispositive issue in this case is whether the trialcourt erred in granting the defendant MidweSterling’s motion todismiss for lack of personal jurisdiction. Plaintiff Replacements, Inc. (Replacements) is a NorthCarolina corporation which buys and sells discontinued and activechina, crystal, flatware, and collectibles. DefendantMidweSterling (MidweSterling) is a general partnershipheadquartered in Missouri which deals in sterling flatware,holloware, and other silverware. Replacements filed thecomplaint in this matter alleging causes of action against defendant MidweSterling for misappropriation of trade secretsunder the North Carolina Trade Secrets Protection Act. Specifically, Replacements contends that in August 1997,MidweSterling came into possession of its suppliers list and usedit to contact potential customers in North Carolina without theconsent of Replacements. MidweSterling did not answer, butinstead filed a motion to dismiss for lack of personaljurisdiction. The trial court granted MidweSterling’s motion todismiss on 25 March 1998. Replacements appeals. The determination of whether jurisdiction is statutorily andconstitutionally permissible due to contact with the forum is aquestion of fact. See Chadbourn, Inc. v. Katz, 285 N.C. 700, 208S.E.2d 676 (1974); Parris v. Disposal, Inc., 40 N.C. App. 282,253 S.E.2d 29, disc. review denied, 297 N.C. 455, 256 S.E.2d 808(1979). The standard of review of an order determining personaljurisdiction is whether the findings of fact by the trial courtare supported by competent evidence in the record; if so, thisCourt must affirm the order of the trial court. Better BusinessForms, Inc. v. Davis, 120 N.C. App. 498, 462 S.E.2d 832 (1995). A claim should be dismissed under Rule 12(b)(6) where it appearsthat plaintiff is not entitled to relief under any set of factswhich could be proven. Miller v. Nationwide Mutual Ins. Co., 112N.C. App. 295, 435 S.E.2d 537 (1993), disc. review denied, 335N.C. 770, 442 S.E.2d 519 (1994). Therefore, “[t]he question forthe [appellate] court is whether, as a matter of law, theallegations of the complaint, treated as true, are sufficient tostate a claim upon which relief can be granted under some legal theory, whether properly labeled or not.” Id. at 300, 435S.E.2d. at 541. The evidence presented to the trial court indicates that MidweSterling, by its own admission, mailed an advertisement toat least fifty North Carolina residents in August 1997. WhileMidweSterling denies appropriating Replacements’ trade secretswith the mass mailing, it does not deny that it directlysolicited business in this state by mailing advertisement toresidents of North Carolina. Additionally, Replacementssubmitted evidence that MidweSterling has had continual businessand contractual business with Replacements prior to the August1997 mass mailing, including (1) selling and shipping merchandiseto Replacements in the amount of approximately $65,000.00; (2)purchasing merchandise from Replacements on at least tenoccasions; (3) telephoning Replacements’ office in North Carolinaon several occasions; (4) contracting with Replacements toparticipate in Replacements’ Star Supplier program, for whichMidweSterling has paid $100.00 per year; and (5) maintaining withReplacements a supplier list of various patterns of silverware itis interested in purchasing. MidweSterling admits soliciting”virtually all” of its business through advertisements innationally-distributed antique, home, interior and similar tradejournals and magazines. Those journals and magazines aredistributed in North Carolina and are available to North Carolinaresidents. MidweSterling also maintains a website, which allowsresidents throughout all the United States, including NorthCarolina, to place orders via internet access. Following its examination of the evidence and oral arguments of counsel, thetrial court made the following findings of fact: [T]he plaintiff has offered no evidence tosupport that the alleged misconductcomplained about in the Complaint occurredwithin the state of North Carolina, but thatinstead all of the evidence is that thealleged conduct occurred outside the state ofNorth Carolina, in the state of Missouri, theCourt so finds as a fact, and thereforeapplies the heightened analysis required bythe “general jurisdiction” cases[.] [P]laintiff has not produced evidence ofsystematic and continuous contacts betweenthe defendant and the forum state of NorthCarolina sufficient to support this Court’sexercise of personal jurisdiction over thedefendant.Based on these findings, the case was dismissed for lack ofpersonal jurisdiction over the defendant. In order for MidweSterling to be subject to personaljurisdiction in the case sub judice, North Carolina’s long-armstatute and the Due Process Clause of the United StatesConstitution must be satisfied. Dillon v. Funding Corp., 291N.C. 674, 231 S.E.2d 629 (1977). Our long-arm statute providesfor personal jurisdiction in any action claiming injury to personor property within this state arising out of an act or omissionin this state, N.C. Gen. Stat. � 1-75.4(3) (1996); an act oromission outside this state by the defendant, provided inaddition that at or about the time of the injury either: a. Solicitation or services activities werecarried on within this State by or onbehalf of the defendant; or b. Products, materials, or thing processed,serviced or manufactured by thedefendant were used or consumed, withinthis State in the ordinary course oftrade. N.C. Gen. Stat. � 1-75.4(4)a, b (1996). Personal jurisdiction isalso property in any action which: a. Arises out of a promise . . . by thedefendant to perform services . . . orto pay for services . . . in thisState�.�.�.; or b. Arises out of services . . . performedfor the plaintiff by the defendantwithin this State . . .; or c. Arises out of a promise, made anywhere.�.�. by the defendant to deliver orreceive within this State . . . thingsof value; or d. Relates to goods . . . shipped from thisState by the plaintiff to the defendanton his order or direction; or e. Relates to goods, documents of title, orother things of value actually receivedby plaintiff in this State from thedefendant . . . .N.C. Gen. Stat. � 1-75.4(5)a-e (1996). When personal jurisdiction is alleged to exist pursuant tothe long-arm statute, the question of statutory authoritycollapses into one inquiry — whether the defendant has theminimum contacts with North Carolina necessary to meet therequirements of due process. Murphy v. Glafenhein, 110 N.C. App.830, 431 S.E.2d 241, disc. review denied, 335 N.C. 176, 436S.E.2d 382 (1993). In order to satisfy the requirements of theDue Process Clause, the pivotal inquiry is whether the defendanthas established “certain minimum contacts with [the forum state]such that maintenance of the suit does not offend ‘traditionalnotions of fair play and substantial justice.’” Id. at 835, 431S.E.2d at 244 ( quoting International Shoe Co. v. Washington, 326U.S. 310, 316, 90 L. Ed. 95, 102 (1945)). The factors used indetermining the existence of minimum contacts include “‘(1)quantity of the contacts, (2) nature and quality of the contacts, (3) the source and connection of the cause of action to thecontacts, (4) the interest of the forum state, and (5)convenience to the parties.’” Murphy, 110 N.C. App. at 835, 431S.E.2d at 244 (quoting Cherry Bekaert & Holland v. Brown, 99N.C. App. at 632, 394 S.E.2d at 655-56 (1990)). The United States Supreme Court has noted two types of long-arm jurisdiction: “specific jurisdiction,” where the controversyarises out of the defendant’s contacts with the forum state, and”general jurisdiction,” where the controversy is unrelated to thedefendant’s activities within the forum, but there are”sufficient contacts” between the forum and the defendant. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,414, 80 L. Ed. 2d 404, 411 (1984). The controversy in this casearises out of the alleged misappropriation of trade secrets ofthe plaintiff by the defendant. The misappropriation occurredwhen the defendant obtained the list and used it to sendadvertisement literature to North Carolina residents. Becausethe controversy arises out of defendant’s contacts with thisstate, specific jurisdiction is sought. See Tom Togs, Inc. v.Ben Elias Industries Corp., 318 N.C. 361, 348 S.E.2d 782 (1986). With specific jurisdiction, the court must analyze therelationship among the defendant, the forum state, and the causeof action. Buck v. Heavner, 93 N.C. App. 142, 145, 377 S.E.2d75, 77 (1989). In a case similar to the present one, our SupremeCourt held that by making an offer to a North Carolina plaintiffto enter into a contract made in this state and havingsubstantial connection with it, a defendant purposefully availed itself of the protection and benefits of our law and sufficientminimum contacts justified the exercise of specific jurisdiction. Tom Togs, Inc., 318 N.C. at 367-68, 348 S.E.2d at 787. In thatcase, the Court found that a single contract had substantialconnection to North Carolina when (1) defendant contactedplaintiff, whom plaintiff knew to be located in North Carolina,thus the contract for the manufacture of shirts was made in NorthCarolina; (2) defendant was told the shirts would be cut in NorthCarolina, and defendant agreed to send its personal labels toplaintiff in North Carolina to be attached, thus defendant wasaware that the contract would be performed in this state; (3)shirts were manufactured and shipped from this state; and (4)after defendant became dissatisfied with the shirts, it returnedthem to this state. Id. at 367, 348 S.E.2d at 786-87. In the present case, the controversy concernsMidweSterling’s alleged misappropriation of trade secrets underthe North Carolina Trade Secrets Protection Act (Act). “Misappropriation” is defined in the act as “acquisition,disclosure, or use of a trade secret of another without expressor implied authority or consent, unless such trade secret wasarrived at by independent development, reverse engineering, orwas obtained from another person with a right to disclose thetrade secret.” N.C. Gen. Stat. � 66-152(1) (1992). The allegedmisappropriation in the present case includes use of the tradesecret information to address mail to at least fifty NorthCarolina suppliers soliciting their business. By its ownadmission, MidweSterling sent the mail in question, which was received in this state in August 1997. Therefore, themisappropriation, or use, concluded in North Carolina. If adefendant has “purposefully directed” activities towards thestate’s residents, it has “fair warning” that it may be sued inthis forum, and the assertion of specific jurisdiction is proper. See Tom Togs, Inc., 318 N.C. at 366, 348 S.E.2d at 786 ( citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 85 L. Ed. 2d528, 540-41 (1985)). Beyond the contact from which thecontroversy in this case arises, MidweSterling has, throughoutthe past several years, entered into numerous sales contractswith Replacements, a North Carolina corporation doing business inthis state. The contracts were substantially performed and thegoods were shipped from this state. MidweSterling alsocontracted to participate in an ongoing Star Supplier programwith Replacements, has maintained a supplier list withReplacements, and has contacted Replacements by telephone callsto North Carolina on several occasions. At the same time,MidweSterling has regularly advertised in magazines and journalswhich are distributed in North Carolina. While all of these actsmay have originated in Missouri, most were directed to, and allconcluded in, the state of North Carolina. Most required orsolicited performance in North Carolina. Therefore,MidweSterling has availed itself of the privilege of conductingbusiness in this state on numerous occasions, and personaljurisdiction is proper. Here, the trial court determined that the alleged conductoccurred outside the state of North Carolina, in the state of Missouri, and therefore applied the “heightened analysis requiredby the ‘general jurisdiction’ cases.” Based on the meaning ofmisappropriation in the Act and evidence presented to the trialcourt, we disagree with this finding and the court’s ultimateconclusion. However, assuming arguendo that the controversy inthis case did not arise from the contacts with this forum becausethe misappropriation of trade secrets occurred outside of NorthCarolina, we find that the exercise of general jurisdiction wouldbe proper. “General jurisdiction” may be asserted over the defendanteven if the cause of action is unrelated to defendant’sactivities in the forum as long as there are sufficient”continuous and systematic” contacts between defendant and theforum state. Fraser v. Littlejohn, 96 N.C. App. 377, 383, 386S.E.2d 230, 234 (1989) ( citing Helicopteros Nacionales deColombia v. Hall, 466 U.S. 408, 414, 80 L. Ed. 2d 404, 411. TheUnited States Supreme Court recognized that the threshold forsatisfying minimum contacts for general jurisdiction is higherthan in specific jurisdiction cases. In order to assert generaljurisdiction there must be “substantial” forum-related minimumcontacts on the part of the defendant. Id. In the present case, there are substantial forum-relatedminimum contacts on the part of the defendant. As discussedpreviously, MidweSterling has maintained systematic andcontinuous contacts with North Carolina since 1994 through itsbusiness relationship with Replacements, including purchases ofapproximately $65,000.00, participation in Replacements’ Star Supplier program, and maintenance of a supplier list withReplacements of patterns of silverware MidweSterling isinterested in purchasing. MidweSterling has placed several phonecalls to Replacements’ North Carolina headquarters regardingbusiness transactions. It has purposely availed itself of theprivilege of doing business here through direct mail to at leastfifty residents and advertisements in journals which arecirculated in North Carolina. It advertises on an internetwebsite which is available to North Carolina citizens. If adefendant has “purposefully avail[ed] itself of the privilege ofconducting activities within the forum State,” it has “thusinvok[ed] the benefits and protections of its laws.” Hanson v.Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 1298 (1958); seeDillon v. Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977)(exercise of personal jurisdiction proper over non-residentdefendant corporation where it had purposely availed itself ofthe privilege of doing business here by actively solicitingorders by mailing twenty-seven advertisements to NorthCarolinians). Therefore, a finding of general jurisdiction inthis case would also be proper. Based on the foregoing, we find controversy at issue arisesfrom the contacts by MidweSterling in the state of NorthCarolina, which are sufficient to satisfy the requirements of ourlong-arm statute and the Due Process Clause. Therefore, theexercise of personal jurisdiction is proper. Competent evidencedoes not support the trial court’s findings of fact. Where atrial court’s finding of fact is not supported by competent evidence, “the corresponding conclusions of law are likewiseerroneous.” Ronald G. Hinson Electric, Inc. v. Union County Bd.of Educ., 125 N.C. App. 373, 379, 481 S.E.2d 326, 330 (1997). Accordingly, we find that the trial court erred in the order of25 March 1998. Reversed and remanded. Judges WYNN and WALKER concur.
REPLACEMENTS, LTD., Plaintiff, v. MIDWESTERLING, a General Partnership, Defendant. No. COA98-1013 North Carolina Court Of Appeals Filed: 4 May 1999 Appeal by plaintiff from an order entered 25 March 1998 by Judge Michael E. Beale in Guilford County Superior Court. Heard in the Court of Appeals 1 April 1999. Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Jim W.Phillips, Jr. and Natasha Rath Marcus, for plaintiff-appellant. Anderson & Associates, P.C., by Joseph L. Anderson, fordefendant-appellee.
 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

New Jersey Legal Awards (NJLA) 2022

September 29, 2022
Florham Park, NJ

New Jersey Law Journal honors lawyers leaving a mark on the legal community in New Jersey with their dedication to the profession.


Learn More

New York Legal Awards 2022 (NYLA)

October 06, 2022
New York, NY

The New York Law Journal honors attorneys and judges who have made a remarkable difference in the legal profession in New York.


Learn More

Women, Influence & Power in Law Awards (WIPLA) 2022

October 18, 2022
Washington, DC

Women, Influence & Power in Law Awards honors women lawyers who have made a remarkable difference in the legal profession.


Learn More

Litigation Associate


A well-respected regional law firm that has represented businesses in Tampa Bay for decades is seeking a commercial litigation associate to ...


Apply Now ›

Tax and T&E Attorney


The Tampa office of a highly-regarded regional law firm is seeking to add depth to their strong transactional team by adding experienced tax...


Apply Now ›

Employment Litigation Associate


A highly-regarded Tampa Bay labor and employment boutique that represents management is seeking an associate with 1-4 years of labor and em...


Apply Now ›

CHIESA SHAHINIAN & GIANTOMASI

09/26/2022
NYLJ Web

Chiesa Shahinian & Giantomasi : Commitment to the highest standards of service.


View Announcement ›

SCHULTEN WARD TURNER & WEISS, LLP

09/21/2022
DR Web

Schulten Ward Turner & Weiss, LLP is pleased to announce that John Gracia has joined the firm as a partner.


View Announcement ›

WISNIEWSKI & ASSOCIATES

09/12/2022
NJLJ Web

WISNIEWSKI & ASSOCIATES LLC Takes pleasure in announcing that Civil Litigator DOUGLAS R. D ANTONIO has become a Partner of the Firm.


View Announcement ›