in the Court of Appeals 11 January 2017.
by defendant from order entered 26 January 2016 by Judge
Lindsay R. Davis, Jr., in Wilkes County No. 15 CVS 1042
Vannoy, Colvard, Triplett & Vannoy, P.L.L.C., by Daniel
S. Johnson and Jay Vannoy, for plaintiff-appellee.
Tackabery & Matamoros, P.A., by James E. Vaughan and M.
Rachael Dimont, for defendant-appellant.
forum selection clause, pursuant to New Jersey law, was
valid, mandatory, and enforceable, the trial court erred in
denying defendant's motion to dismiss. Where
defendant's contacts with the State of North Carolina
were insufficient to create personal jurisdiction, the trial
court erred in denying defendant's motion to dismiss. We
vacate and remand.
Factual and Procedural Background
Construction, Inc. ("Berto") is a New Jersey
corporation with its principal and only place of business
located in Rahway, New Jersey. Berto performs concrete
construction in the New Jersey-New York-Pennsylvania tristate
area. As part of its business, Berto entered into a contract
(the "Contract") with the Port Authority of New
York and New Jersey (the "Port Authority") to
perform construction. In connection with the Contract, the
Port Authority required Berto to furnish and install hazmat
and supply storage buildings. The Contract limited the
suppliers for this project to one of five manufacturers, one
of whom was U.S. Chemical Storage, LLC ("US
Chemical"). U.S. Chemical is a North Carolina limited
liability company. Berto chose U.S. Chemical as its
subcontractor, and the two entered into a subcontract
agreement (the "Subcontract").
September 2015, U.S. Chemical filed a complaint against
Berto, alleging breach of contract. Specifically, U.S.
Chemical alleged that Berto had agreed to pay U.S. Chemical
$736, 400.00, that U.S. Chemical complied with its obligation
under the Subcontract, and that Berto failed to pay an
overdue balance of $199, 344.25. In response to the
complaint, Berto filed a motion to dismiss, pursuant to Rule
12(b)(2) of the North Carolina Rules of Civil Procedure,
alleging that the court lacked personal jurisdiction over
Berto. In an affidavit in support of the motion, Douglas R.
Birdsall ("Birdsall"), a project manager for Berto,
alleged that Berto had had no contact with the State of North
Carolina prior to its contract with U.S. Chemical; that the
Contract was explicitly subject to the jurisdiction and laws
of New York and New Jersey; and that in the Subcontract U.S.
Chemical agreed to be bound by the terms of the Contract,
including a specific provision providing that the Subcontract
was subject to New Jersey law. Birdsall further averred that
U.S. Chemical had failed to satisfactorily perform its work;
that its submissions pertaining to the buildings required
multiple revisions; that it supplied incorrect piping on
three buildings; that it delivered a building to the wrong
location; that it failed to provide certain pieces of
equipment; that its defective submissions caused delay to the
project; and that all of these defects and delays resulted in
$180, 933.80 in increased costs to Berto, and the possibility
of Berto being assessed for liquidated damages by the Port
Authority. Additional arguments, both on the forum selection
provision and Berto's minimum contacts, were presented at
a hearing on Berto's motion to dismiss.
January 2016, the trial court entered an order on Berto's
motion to dismiss. The trial court found that the Subcontract
"provided that it would be governed by New Jersey law
and that the plaintiff would be bound to the defendant by the
terms of the defendant's contract with the Port
Authority[;]" and that the Contract "provided that
the defendant agreed to 'irrevocably submit[ ] [it]self
to the jurisdiction of the Courts of the State of New York
and to the jurisdiction of the Courts of the State of New
Jersey in regard to any controversy' arising out of the
project." The trial court then noted that the
Subcontract "did not provide, however, that the parties
selected these courts as the exclusive jurisdictions for any
disputes arising out of the project[, ]" and concluded
that U.S. Chemical's suit "is not barred by the
parties' subcontract, because the forum selection clause
is permissive, not mandatory[.]" With respect to minimum
contacts, the trial court noted that
North Carolina extends the jurisdiction of its courts to
actions arising out of "services actually performed . .
. for the defendant by the plaintiff within this State if
such performance within this State was authorized or ratified
by the defendant"; and actions relating to "goods .
. . 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)(b), (d).
trial court found that, with Berto's knowledge, U.S.
Chemical "designed and constructed twelve hazmat and
supply storage buildings at its plant in North
Carolina[;]" and that "[t]he buildings were shipped
from the plaintiff's facility in North Carolina to the
defendant[.]" The trial court therefore concluded that
the action arose "out of services actually performed by
the plaintiff within North Carolina for the defendant, "
and that it "relates to goods and things of value
shipped from North Carolina by the plaintiff to the defendant
on its order or direction, " and thus that
"personal jurisdiction is extended by N.C. Gen. Stat.
§ 1-75.4(5)(b) & (d)." The trial court
concluded that the Contract and Subcontract did not grant
exclusive jurisdiction to New York or New Jersey, that Berto
purposefully availed itself of the privilege of doing
business in North Carolina, and that its contacts were
sufficient to establish personal jurisdiction. It therefore
denied Berto's motion to dismiss.
preliminary matter, we note that this is an interlocutory
"The denial of a motion to dismiss is an interlocutory
order which is not immediately appealable unless that denial
affects a substantial right of the appellant." Carl
v. State, 192 N.C.App. 544, 550, 665 S.E.2d 787, 793
(2008). "The appealing party bears the burden of
demonstrating that the order from which he or she seeks to
appeal is appealable despite its interlocutory nature."
Hamilton v. Mortgage Information Services, 212
N.C.App. 73, 77, 711 S.E.2d 185, 189 (2011) (citing
Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C.App.
377, 379, 444 S.E.2d 252, 253 (1994)). Thus, the extent to
which an appellant is entitled to immediate interlocutory
review of the merits of his or her claims depends upon his or
her establishing that the trial court's order deprives
the appellant of a right that will be jeopardized absent
review prior to final judgment. Id.; see also Harbour
Point Homeowners' Ass'n, Inc. v. DJF Enters.,
Inc., 206 N.C.App. 152, 157, 697 S.E.2d 439, 444 (2010).
Richmond Cty. Bd. of Educ. v. Cowell, 225 N.C.App.
583, 585, 739 S.E.2d 566, 568 (2013). Thus, in order for us
to hear Berto's appeal, Berto must establish the
existence of a substantial right.
correctly argues that the validity of a forum selection
clause constitutes a substantial right. Cox v.
Dine-A-Mate, Inc., 129 N.C.App. 773, 776, 501 S.E.2d
353, 355 (1998) (holding that the trial court's denial of
a defendant's motion to dismiss based on a forum
selection clause was appealable). Similarly, Berto correctly
argues that N.C. Gen. Stat. § 1-277(b) guarantees the
right to immediately appeal an adverse ruling with respect to
the jurisdiction of the court over a person or property based
upon minimum contacts. See Credit Union Auto Buying
Servs., Inc. v. Burkshire Props. Grp. Corp.,
___ N.C.App. ___, ___, 776 S.E.2d 737, 739 (2015) (holding
that N.C. Gen. Stat. § 1-277(b) guarantees a right to
immediate appeal that is limited to minimum contacts
questions, the subject matter of Rule 12(b)(2)). We hold that
Berto has demonstrated the existence of a substantial right
that would be jeopardized absent review, and consider
Berto's interlocutory appeal.