Meyer v. Race City Classics, LLC , 235 N.C. App. 111 ( 2014 )

NO. COA13-1371
NORTH CAROLINA COURT OF APPEALS
Filed: 29 July 2014
RON D. MEYER,
Plaintiff-Appellant,
v. Iredell County
No. 13 CVD 1255
RACE CITY CLASSICS, LLC,
Defendant-Appellee.
Appeal by Plaintiff from order entered 21 October 2013 by
Judge H. Thomas Church in District Court, Iredell County. Heard
in the Court of Appeals 7 April 2014.
Pope McMillan Kutteh & Schieck, P.A., by William H.
McMillan and Matthew J. Pentz, for Plaintiff-Appellant.
Homesley, Gaines & Dudley, LLP, by Edmund L. Gaines and
Leah Gaines Messick, for Defendant-Appellee.
McGEE, Judge.
Ron D. Meyer (“Plaintiff”) saw a 1970 Ford Mustang (“the
car”) in an advertisement placed by Race City Classics, LLC,
(“Defendant”) on the website classiccars.com in July of 2012.
Defendant is a business, located in Iredell County, that
specializes in the consignment and sale of classic cars.
Defendant also placed advertisements on carsforsale.com, on
eBay, and on its own website. Plaintiff, a resident of
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Nebraska, contacted Defendant and, through a series of telephone
calls and emails, Plaintiff and Defendant reached an agreement
whereby Plaintiff would pay Defendant $21,000.00 to purchase the
car. Thomas M. Alphin (“Alphin”), one of Defendant’s owners,
handled the negotiations for Defendant. Plaintiff wired the
full amount of $21,000.00 to Defendant. Plaintiff did not come
to North Carolina at any time during the negotiation and
purchase transaction. Plaintiff wanted the car shipped to his
home in Nebraska, telling Defendant that Plaintiff planned to
present the car at vehicle car shows in Nebraska.
Alphin sent Plaintiff an email in which Alphin stated: “I
lined up a shipper, and he will give me the price tomorrow.” In
a subsequent email to Plaintiff, Alphin stated:
I have the shipping lined up and it is
something I can’t control. They put it out
and have a driver accept the bid and they
come and get it. I had it on multiple sites
looking for the best quote, and Alpine was
the best so I went ahead and booked it for
you. I paid $380, so your cost is $345.
The car was delivered to Plaintiff in Nebraska, but
Plaintiff was dissatisfied with the condition of the car.
Plaintiff requested that Defendant refund the purchase price,
but Defendant refused.
Plaintiff filed an action for damages against Defendant in
Nebraska state court. Plaintiff contended that, upon receipt of
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the car, the “paint on the car was cracked at various spots, the
front hood was out of alignment, the trunk could not be opened
and the car could not be started.” Defendant, after being
served with notice of the action, failed to appear to contest
Plaintiff’s claims and the Nebraska court entered a default
judgment against Defendant in the amount of $8,942.30 on 26
February 2013. That was the amount the Nebraska court found
necessary to repair the problems alleged by Plaintiff.
Pursuant to N.C. Gen. Stat. § 1C-1703, Plaintiff filed a
“Docketing of Foreign Judgment” and the default judgment from
the Nebraska state court in Iredell County Superior Court on 30
May 2013. Plaintiff also filed, pursuant to N.C. Gen. Stat. §
1C-1704, a “Notice of Filing Foreign Judgment” on the same day.
Pursuant to N.C. Gen. Stat. § 1C-1705(a), Defendant filed a
“Motion for Relief Against Foreign Judgment” on 18 June 2013,
contending the Nebraska court lacked personal jurisdiction over
Defendant. Pursuant to N.C. Gen. Stat. § 1C-1705(b), Plaintiff
then filed a “Motion for Enforcement of Foreign Judgment” on 8
July 2013. At a 21 October 2013 hearing, the trial court found
Defendant did not have sufficient minimum contacts with the
State of Nebraska to confer personal jurisdiction over Defendant
to the State of Nebraska. The trial court granted Defendant’s
“Motion for Relief Against Foreign Judgment” and set aside the
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docketing of the State of Nebraska foreign judgment. Plaintiff
appeals.
I. Standard of Review
In questions of personal jurisdiction, this Court
“considers only ‘whether the findings of fact by the trial court
are supported by competent evidence in the record;’ . . . we are
not free to revisit questions of credibility or weight that have
already been decided by the trial court.” Deer Corp v. Carter,
177 N.C. App. 314, 321, 629 S.E.2d 159, 165 (2006) (citation
omitted). “If the findings of fact are supported by competent
evidence, we conduct a de novo review of the trial court's
conclusions of law and determine whether, given the facts found
by the trial court, the exercise of personal jurisdiction would
violate defendant‘s due process rights.” Id. at 321-22, 629
S.E.2d at 165.
II. Analysis
Defendant’s Motion for Relief Against Foreign Judgment
Plaintiff argues that the trial court erred in granting
Defendant’s motion for relief from the Nebraska foreign judgment
because Nebraska courts had personal jurisdiction over Defendant
for the cause of action arising out of the sale of the car.
Generally, one state must accord full faith
and credit to a judgment rendered in another
state. However, because a foreign state's
judgment is entitled to only the same
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validity and effect in a sister state as it
had in the rendering state, the foreign
judgment must satisfy the requisites of a
valid judgment under the laws of the
rendering state before it will be afforded
full faith and credit.
To meet the requirements of a valid
judgment, the rendering court must comport
with the demands of due process such that it
has personal jurisdiction — otherwise known
as minimum contacts — over defendant.
International Shoe Co. v. State of
Washington, 326 U.S. 310, 90 L. Ed. 95(1945). The Due Process Clause protects an
individual's liberty interest in not being
subject to the judgment of a forum with
which he has established no meaningful
contacts or relations. Id. “A judgment
rendered in violation of due process is void
in the rendering State and is not entitled
to full faith and credit elsewhere.” World–
Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 62 L. Ed. 2d 490 (1980). N.C. Gen.
Stat. § 1A–1, Rule 60(b)(4) allows a party
to petition for relief from judgment on the
grounds that the judgment is void. A void
judgment is a legal nullity which may be
attacked at any time.
Bell Atl. Tricon Leasing Corp. v. Johnnie's Garbage Serv., Inc.,
113 N.C. App. 476, 478-79, 439 S.E.2d 221, 223-24 (1994) (some
citations omitted). This Court has held that, in actions to
enforce a foreign judgment, the burden of proof on the issue of
full faith and credit is on the judgment creditor. Lust v.
Fountain of Life, Inc., 110 N.C. App. 298, 300, 429 S.E.2d 435,
438 (1993). The introduction into evidence of a copy of the
foreign judgment, authenticated pursuant to N.C. Gen. Stat. §
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1A-1, Rule 44, establishes a presumption that the judgment is
entitled to full faith and credit. Lust, 110 N.C. App. 298 at
301, 429 S.E.2d 435 at 437 (citing Thrasher v. Thrasher, 4 N.C.
App. 534, 540, 167 S.E.2d, 397, 400 (1967)). “This presumption
can be rebutted by the judgment debtor upon a showing that the
rendering court . . . did not have jurisdiction over the
parties[.]” Id.In the present case, Plaintiff filed an authenticated
judgment in the Office of the Clerk of Superior Court of Iredell
County. Therefore, Defendant, as the judgment debtor, had the
burden of presenting evidence to rebut the presumption that the
judgment was valid. We agree with Plaintiff that Defendant has
not done so.
Nebraska courts perform a two-step analysis when
determining whether a state court’s exercise of personal
jurisdiction over a defendant is constitutional. Quality Pork
Intern. v. Rupari Food Services, Inc., 267 Neb. 474, 480, 675
N.W.2d 642, 649 (2004). First, Nebraska’s long-arm statute must
authorize the exercise of personal jurisdiction over a
defendant. Id. Second, the trial court must consider whether
minimum contacts exist between the defendant and the forum state
and whether such personal jurisdiction may be exercised over the
defendant without offending constitutional due process. Id.-7-
In the present case, this Court must determine whether
Nebraska’s long-arm statute authorized personal jurisdiction
over Defendant. Neb. Rev. Stat. § 25-536 (1983) reads:
A court may exercise personal jurisdiction
over a person:
(1) Who acts directly or by an agent, as to
a cause of action arising from the person:
(a) Transacting any business in this state;
(b) Contracting to supply services or things
in this state;
(c) Causing tortious injury by an act or
omission in this state;
(d) Causing tortious injury in this state by
an act or omission outside this state if the
person regularly does or solicits business,
engages in any other persistent course of
conduct, or derives substantial revenue from
goods used or consumed or services rendered,
in this state;
(e) Having an interest in, using, or
possessing real property in this state; or
(f) Contracting to insure any person,
property, or risk located within this state
at the time of contracting; or
(2) Who has any other contact with or
maintains any other relation to this state
to afford a basis for the exercise of
personal jurisdiction consistent with the
Constitution of the United States.
Subsection (2) of the above statute “expressly extends
Nebraska’s jurisdiction over nonresidents as far as the U.S.
Constitution permits.” Crete Carrier Corp. v. Red Food Stores,
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Inc., 254 Neb. 323, 328, 576 N.W.2d 760, 764 (1998) (citing
Castle Rose v. Philadelphia Bar & Grill, 254 Neb. 299, 576
N.W.2d 192 (1998)). Therefore, we need only address whether
Defendant had such minimum contacts with Nebraska that the
exercise of personal jurisdiction would not offend federal
constitutional principles of due process. Id. Depending on the
quality and nature of Defendant’s contacts with Nebraska,
Nebraska’s courts may have either general or specific personal
jurisdiction over Defendant. Quality Pork, 267 Neb. at 482-83,
675 N.W.2d at 650.
Due process for personal jurisdiction over a nonresident
defendant requires that the defendant's minimum contacts with
the forum state be such that “maintenance of the suit does not
offend ‘traditional notions of fair play and substantial
justice.’” Internat. Shoe Co. v. Washington, 326 U.S. 310, 316,
90 L. Ed. 95, 102 (1945) (citing Milliken v. Meyer, 311 U.S.
457, 463, 85 L. Ed. 278, 283 (1940)). The Due Process Clause
“gives a degree of predictability to the legal system that
allows potential defendants to structure their primary conduct
with some minimum assurance as to where that conduct will and
will not render them liable to suit.” Burger King v. Rudzewicz
471 U.S. 462, 472, 85 L. Ed. 2d 528, 540 (1985) (citing World-
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Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 62 L. Ed.
2d 490, 501 (1980)).
In Burger King, the United States Supreme Court further
held that individuals have fair warning that a particular
activity may subject them to a foreign state’s specific
jurisdiction if the defendant had “purposefully directed” his
activities at residents of the forum, and the litigation
resulted from alleged injuries that “ar[ose] out of or relate[d]
to” those activities. Burger King, 471 U.S. at 472, 85 L. Ed.
2d at 540-41 (citations omitted). Even when the cause of action
does not arise out of or relate to a defendant’s activities in
the forum state, the state may exercise general jurisdiction
over the defendant when there are sufficiently continuous and
systematic contacts between the state and the defendant.
Helicopteros Nacionales De Columbia v. Hall, 466 U.S. 408, 414-
15, 80 L. Ed. 2d 404, 411-12.
Defendant argues that sufficient minimum contacts do not
exist for Nebraska state courts to exercise general personal
jurisdiction over him because “[t]he sale to this Nebraska
resident happened one time, and did not create any sort of
systematic or continuous relationship with the state.” We agree
that Defendant’s conduct in this instance was insufficient to
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allow Nebraska to obtain general personal jurisdiction over
Defendant.
However, the cause of action arose out of Defendant’s
contact with Nebraska, and we hold that the quality and nature
of Defendant’s contacts were such that the contacts conferred
specific personal jurisdiction over Defendant in Nebraska state
courts. Plaintiff first saw the car indirectly through an
advertisement Defendant placed on classiccars.com, and Plaintiff
and Defendant entered into extensive negotiations for the car
immediately after Plaintiff contacted Defendant on 15 July 2012.
The negotiations lasted for three days and took place through a
series of telephone calls and emails. During these discussions,
Alphin told Plaintiff, both verbally and in emails, that
everything in the car worked as it should, and that the car
“sounded and drove great.” Plaintiff told Alphin that Plaintiff
intended to present the car at car shows in Nebraska. Plaintiff
and Defendant agreed to split the cost of shipment of the car.
Plaintiff and Alphin now disagree as to who was responsible for
hiring the shipping company. Plaintiff contends that pursuant
to agreement of the parties, Alphin handled all the shipping
logistics. The emails in the record indicate that Alphin
handled the logistics of the car’s shipment. Defendant accepted
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the wire transfer of $21,000.00 from Plaintiff, who resided in
Nebraska, as payment for the car.
It logically follows that Alphin knew that if Plaintiff’s
ability to use and enjoy the car was impaired, such impairment
would likely occur in Nebraska. By directing these activities
towards Nebraska, Defendant could reasonably have anticipated
being haled into court in Nebraska if the car was defective and
the quality was less than represented by Defendant. World-Wide,
444 U.S. at 297, 62 L. Ed. 2d. at 501.
Furthermore, a single contract is a sufficient contact for
due process purposes, even if the defendant has not physically
entered the forum state, as long as the contract has a
substantial connection to the forum state. McGee v. Int’l Life
Insurance Co., 355 U.S. 220, 223, 2 L. Ed. 223, 226 (1957). In
McGee, a single life insurance contract was sufficient to confer
personal jurisdiction over the defendant in California, despite
the fact that the defendant had no other contracts in
California, did not market its services there, and never had its
agents physically enter the state in the course of their
employment. McGee, 355 U.S. at 222, 2 L. Ed. at 225.
The North Carolina Supreme Court followed this rule in
Williamson Produce, Inc. v. J.H. Satcher, Jr., holding: “When a
contract bears a substantial connection to the forum state, a
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defendant who enters into that contract ‘can reasonably
anticipate being haled into court . . .’ in the forum state.”
Williamson Produce, Inc. v. J.H. Satcher, Jr., 122 N.C. App.
589, 594, 471 S.E.2d 96, 99 (1996) (citations omitted). In
Williamson Produce, the plaintiff initiated negotiations in
South Carolina with the defendant, a South Carolina peach
farmer. Id. at 589, 471 S.E.2d at 97. The plaintiff travelled
to South Carolina, where the plaintiff finalized a contract with
the defendant to sell the defendant’s peaches in North Carolina.
Id. at 590, 471 S.E.2d at 96. When the defendant breached the
contract, the plaintiff sued the defendant in North Carolina.
Id. at 591, 471 S.E.2d at 97. Since the defendant contracted
with the plaintiff to have his peaches sold in North Carolina,
the contract bore a substantial connection to North Carolina and
the defendant “should not be surprised with being haled into a
North Carolina court.” Id. at 594, 471 S.E.2d at 99 (citation
omitted).
In the present case, Plaintiff initiated the negotiations
with Defendant for the purchase of the car. Defendant did not
physically enter Nebraska, but it contracted with Plaintiff, a
Nebraska resident, to sell the car to Plaintiff and have it
shipped to Plaintiff’s residence in Nebraska. Payment for the
car was sent from Plaintiff in Nebraska. Defendant knew
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Plaintiff intended to show the car at car shows in Nebraska.
These aspects of the contract show that the contract had a
substantial connection to Nebraska. Therefore, Defendant should
not be surprised to have been haled into a Nebraska court when
Plaintiff alleged the car was not as Defendant had represented.
Defendant’s constitutional right to due process was not violated
by Plaintiff’s action having been initiated in Nebraska.
Defendant argues that because he was never physically in
Nebraska, never paid a sales tax in Nebraska, never attended
meetings in Nebraska, and never purchased a car in Nebraska, the
Nebraska state court lacked personal jurisdiction over him.
However, in the above mentioned McGee case, the defendant did
not physically enter the forum state, did not advertise directly
to residents of the forum state, nor did it have any other
contracts with residents of the forum state. McGee, 355 U.S. at
222, 2 L. Ed. at 225. Yet the forum state’s exercise of
personal jurisdiction over the defendant in McGee was upheld as
constitutional. Id.
In Quality Pork, the Nebraska Supreme Court found that
personal jurisdiction existed over Rupari Food Services, Inc.
(“Rupari”), a Florida corporation, despite the fact that Rupari
had never made any sales into or directly to the State of
Nebraska and none of its employees or officers had ever visited
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Nebraska in the course of their employment with Rupari. Quality
Pork, 267 Neb. at 478, 675 N.W.2d at 647. Rupari had contracted
to pay for three shipments of Quality Pork’s products to Star
Food Processing, Inc., a Texas corporation. Id. at 477, 675
N.W.2d at 646. Rupari failed to pay for one of the orders, and
Quality Pork, a Nebraska corporation, filed an action in
Nebraska state court to recover the cost of the third order.
Id. at 477, 675 N.W.2d at 647.
In its conclusion in Quality Pork, the Nebraska Supreme
Court stated:
Quality Pork's claim arose out of Rupari's
contacts with a company located in Nebraska.
Therefore, in evaluating whether the
exercise of specific personal jurisdiction
is reasonable, we conclude that it would not
be unduly burdensome for Rupari to defend an
action in Nebraska. Quality Pork had a
valid interest in obtaining convenient and
effective relief which supported the
bringing of its action in this state. By
purposefully conducting business with
Quality Pork, Rupari could reasonably
anticipate that it might be sued in Nebraska
if it failed to pay for products ordered
from Quality Pork.
Id. at 484-85, 675 N.W.2d at 652.
Similarly, in the present case, Defendant could reasonably
anticipate being sued in Nebraska if the car Defendant delivered
to Plaintiff was alleged to be not of the quality represented by
Defendant to Plaintiff. Plaintiff had a valid interest in
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obtaining convenient and effective relief, and Defendant
presented no evidence to show that defending the lawsuit in
Nebraska would be unduly burdensome or that doing so would
violate notions of fair play and substantial justice. Internat.
Shoe, 326 U.S. at 316, 90 L. Ed. at 102.
Finally, case law from this Court, on enforcement of
foreign judgments, supports a finding that Nebraska state courts
have personal jurisdiction over Defendant. In Automotive
Restyling Concepts, Inc. v. Central Service Lincoln Mercury,
Inc., Automotive Restyling Concepts, Inc. (“Automotive”), a
Virginia corporation, contracted with Central Service Lincoln
Mercury (“Central”), a North Carolina corporation, to restyle
four of Central’s used cars on Automotive’s Virginia premises.
Automotive Restyling Concepts Inc. v. Central Service Lincoln
Mercury, Inc., 92 N.C. App. 372, 373, 374 S.E.2d 399, 400
(1988). The contract was negotiated and agreed to in North
Carolina. Id. One of Automotive’s employees came to North
Carolina and transported the cars to Virginia. Id. The cars
were restyled in Virginia, but Central was dissatisfied and
refused to pay its bill. Id. at 374, 374 S.E.2d at 400.
Automotive sued Central in Virginia state court, and a
default judgment was entered against Central. Id. Automotive
filed the judgment in a North Carolina district court, which
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upheld the judgment. Id. Our Court stated that, for a foreign
judgment against a nonresident to be valid, the trial court must
be authorized by statute to exercise jurisdiction over the
nonresident defendant, and the exercise of jurisdiction must be
in accord with the constitutional limits of due process. Id.
This Court affirmed the trial court’s order, holding that the
requirements for jurisdiction in Virginia had been met. Id.
This Court concluded: “Having voluntarily availed itself of the
privilege of having its cars improved and restyled in Virginia,
that state's enforcement of defendant's obligation to pay for
the services so obtained was to be expected.” Id. at 375, 374
S.E.2d at 401; see also Security Credit Leasing, Inc. v. D.J.’s
of Salisbury, Inc., 140 N.C. App. 521, 537 S.E.2d 227 (2000).
Defendant argues the present case is different from
Automotive Restyling because less of the contract in this case
was performed in the foreign state than in Automotive Restyling.
We find that argument unpersuasive. In both cases, the
defendant did not physically enter the state in which judgment
was entered. Each contract was fulfilled in the state foreign
to each defendant. In Automotive Restyling, the contract was
fulfilled by the restyling of the four cars in Virginia. In the
present case, the contract was fulfilled by the delivery of the
car to Plaintiff in Nebraska.
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We hold that the trial court in Nebraska properly exercised
personal jurisdiction over Defendant. Defendant intentionally
directed its actions towards Nebraska through: (1) advertising
its cars on websites accessible to Nebraskans, (2) its contract
negotiations with Plaintiff, (3) receiving Plaintiff’s payment
from Nebraska, and (4) shipment of the car to Plaintiff in
Nebraska. Plaintiff’s inability to use and enjoy the car
resulted from Defendant’s contacts with Nebraska. It was
foreseeable that any hindrance to Plaintiff’s use and enjoyment
of the car caused by Defendant’s misrepresentations would occur
in Nebraska. As such, Defendant could reasonably have
anticipated being haled into court in Nebraska. Defendant did
not show that defending the suit in Nebraska would have been
unduly burdensome to the extent that it would offend notions of
fair play and substantial justice. We hold that the foreign
judgment from the Nebraska state court is valid and enforceable
in North Carolina.
Reversed and remanded.
Chief Judge MARTIN and Judge CALABRIA concur.