United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
Carlton Tilley, Jr. Senior United States District Judge.
matter is before the Court on a Motion to Dismiss [Doc. #19]
and a Motion to Strike [Doc. #27] by Defendants Highpoint
Risk Services, LLC (“Highpoint”) and Charles
David Wood, Jr. (collectively “Defendants”).
Defendants have moved to dismiss the claims against them for
lack of personal jurisdiction, or in the alternative, for
failure to state a claim for which relief can be granted, or
in the alternative, for improper venue. They have also moved
to strike Companion Property and Casualty Insurance
Company's response to their motion to dismiss as
impermissible under the Local Rules. For the reasons
explained below, the motion to dismiss is granted, because
the Court lacks personal jurisdiction over these two
Defendants. The motion to strike is denied.
Plaintiff Debbie's Staffing Services, Inc.
(“Debbie's Staffing”), a North Carolina
corporation with its principal place of business in
Winston-Salem, North Carolina, “is a staffing and
personnel placement company engaged in the business of
supplying human capital solutions to customers throughout the
region, state, and nation.” (Compl. ¶¶ 2, 8
[Doc. #1].) Defendant Companion Property and Casualty
Insurance Company n/k/a Sussex Insurance Company
(“Companion”), and Dallas National Insurance
Company (“DNIC”), who is not a party to this
suit, served as workers' compensation insurance carriers
for Debbie's Staffing in the states where it operated in
2012 through 2014. (Id. ¶¶ 11, 12.)
Because Debbie's Staffing selected a high deductible
insurance policy, Companion and DNIC required it to deposit
certain amounts of collateral funds with Highpoint, a Texas
limited liability company with its principal place of
business in Texas. (Id. ¶ 13.) Highpoint,
described as an agent and administrator for Companion and
DNIC, collected premiums and collateral funds “on
behalf of Companion and DNIC, representing that they would
appropriately submit same to Companion and DNIC or safe guard
same for the benefit of Companion and DNIC.”
(Id. ¶¶ 9, 10, 17.) Debbie's Staffing
submitted $804, 467.67 in collateral funds “as directed
by [Highpoint] and/or Companion”, “some or all
of” which Highpoint deposited into trust accounts under
Companion's possession and control. (Id.
¶¶ 18, 19.) These funds were to be used “in
the event that Debbie's Staffing defaulted or otherwise
failed to fulfill its obligation under the” insurance
policies. (Id. ¶ 14.)
Staffing believes that none of the collateral funds were used
and has demanded their return from Highpoint, Companion, and
DNIC pursuant to the terms of the insurance policies
“and contracts”. (Id. ¶¶ 14,
24, 25.) However, Companion and Highpoint “have
effectively claimed that the funds are in the possession of
the other or that they are not in possession of the
funds.” (Id. ¶ 33.) As a result,
Debbie's Staffing has sued Companion and
Highpoint for breach of contract, conversion, unjust
enrichment, and breach of fiduciary duty and seeks a
declaratory judgment and constructive trust. (Id.
¶¶ 33-58.) Debbie's Staffing has sued Wood, a
citizen and resident of Texas who owns all interest in
Highpoint and is its only member, hoping to pierce
Highpoint's corporate veil. (Id. ¶ 3.)
Highpoint and Wood challenge this court's jurisdiction
over them. Because it is determined the Court has no personal
jurisdiction over Highpoint and Wood, their other bases upon
which to dismiss the claims against them are not addressed.
defendant asserts a Rule 12(b)(2) challenge to a court's
personal jurisdiction, the question is one for the court and
the plaintiff bears the burden to prove the existence of a
ground for personal jurisdiction. Combs v. Bakker,
886 F.2d 673, 676 (4th Cir. 1989). The burden “varies
according to the posture of a case and the evidence that has
been presented to the court.” Grayson v.
Anderson, 816 F.3d 262, 268 (4th Cir. 2016). Ultimately,
a plaintiff must prove the existence of a ground for
jurisdiction by a preponderance of the evidence. Id.
(citing Combs, 886 F.2d at 676). However, when, as
here, the court addresses the question of personal
jurisdiction on the basis of the motion papers, supporting
legal memoranda, relevant allegations of the complaint, and,
if provided, supporting evidence,  the plaintiff has the burden
of making a prima facie showing in support of jurisdiction.
Id. (citing Combs, 886 F.2d at 676);
Universal Leather, LLC v. Koro AR, S.A., 773 F.3d
553, 558 (4th Cir. 2014).
plaintiff makes a prima facie showing in this context when it
“present[s] evidence sufficient to defeat a motion for
judgment as a matter of law.” In re Polyester
Staple Antitrust Litig., No. 3:03CV1516, 2008 WL 906331,
at *7 (W.D. N.C. Apr. 1, 2008) (quoting Reese Bros., Inc.
v. U.S. Postal Serv., 477 F.Supp.2d 31, 36 (D.D.C.
2007)); see also Mattel, Inc. v. Greiner & Hausser
GmbH, 354 F.3d 857, 862 (9th Cir. 2003) cited in
Universal Leather, 773 F.3d at 561 (stating that a
plaintiff makes a prima facie showing of personal
jurisdiction by presenting facts that, if true, would support
jurisdiction). Stated another way, a plaintiff makes a prima
facie showing when there is evidence which a reasoning mind
could accept as sufficient to support the proposition in
an evidentiary hearing, the court “must construe all
relevant pleading allegations in the light most favorable to
the plaintiff, assume credibility, and draw the most
favorable inferences for the existence of
jurisdiction.” Combs, 886 F.2d at 676; see
also Universal Leather, 773 F.3d at 560 (requiring the
court to assume the plaintiff's version of the facts is
credible and to construe any conflicting facts in the
affidavits in the light most favorable to the plaintiff).
However, “[t]he allegations of the complaint are taken
as true only if they are not controverted by evidence from
the defendant, ” Vision Motor Cars, Inc. v. Valor
Motor Co., 981 F.Supp.2d 464, 468 (M.D. N.C. 2013)
(citing Wolf v. Richmond Cty. Hosp. Auth., 745 F.2d
904, 908 (4th Cir. 1984)), which is the situation here as
Defendants have presented argument without
federal court may exercise personal jurisdiction over a
non-resident defendant only if the forum state's long-arm
statute authorizes the exercise of jurisdiction and the
exercise of jurisdiction comports with Fourteenth Amendment
due process requirements. Christian Sci. Bd. of Dirs. of
First Church of Christ, Scientist v. Nolan, 259 F.3d
209, 215 (4th Cir. 2001). North Carolina's long-arm
statute, General Statute § 1-75.4, “is designed to
extend jurisdiction over nonresident defendants to the
fullest limits permitted by the Fourteenth Amendment's
due-process clause.” Church v. Carter, 380
S.E.2d 167, 169 ( N.C. Ct. App. 1989); see also Christian
Sci. Bd. of Dirs., 259 F.3d at 215 (stating the same).
Thus, the court's focus becomes whether the plaintiff has
made a prima facie showing that the defendant's contacts
with North Carolina satisfy constitutional due process.
Universal Leather, 773 F.3d at 558-59. Due process
allows a court to exercise general or specific jurisdiction
over a defendant.
first argue that neither Debbie's Staffing's
allegations nor supporting evidence permits the Court to
exercise general jurisdiction over them. General jurisdiction
exists over a foreign corporate defendant when its
“continuous corporate operations within a state [are]
so substantial and of such a nature as to justify suit
against it on causes of action arising from dealings entirely
distinct from those activities.” Int'l Shoe Co.
v. Washington, 326 U.S. 310, 318 (1945); see also
Helicopteros Nactionales de Colombia, S.A. v. Hall, 466
U.S. 408, 414 n.9 (1984) (“When a State exercises
personal jurisdiction over a defendant in a suit not arising
out of or related to the defendant's contacts with the
forum, the State has been said to be exercising
‘general jurisdiction' over the defendant.”).
General jurisdiction requires a foreign defendant's
“affiliations with the State [to be] so
‘continuous and systematic' as to render [it]
essentially at home in the forum State.” Goodyear
Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,
919 (2011) (citing Int'l Shoe Co., 326 U.S. at
317). “The ‘paradigm' forums in which a
corporate defendant is ‘at home, ' . . . are the
corporation's place of incorporation and its principal
place of business.” BNSF Ry. Co. v. Tyrrell,
U.S., 137 S.Ct. 1549, 1558 (2017) (citing Daimler AG v.
Bauman, 571 U.S. 117,, 134 S.Ct. 746, 761 n.19 (2015)).
Similarly, “[f]or an individual, the paradigm forum for
the exercise of general jurisdiction is the individual's
domicile”. Goodyear Dunlop Tires Operations,
S.A., 564 U.S. at 924. The Supreme Court has recognized
the possibility of an exceptional case, though, like
Perkins v. Benguet Consol. Mining Co., 342 U.S. 437
(1952), where the war forced the defendant to relocate
temporarily from the Philippines to Ohio such that Ohio
became “the center of the corporation's wartime
activities” and suit was proper there. BNSF Ry.
Co., 137 S.Ct. at 1558.
clear that Highpoint is neither incorporated nor maintains
its principal place of business in North Carolina.
Furthermore, neither the allegations in the Complaint,
(see Compl. ¶ 6 (alleging that
“representatives of Defendants [including Companion]
traveled to North Carolina in furtherance of relationships
with . . . other clients with operations or domicile in North
Carolina”)), nor any evidence Debbie's Staffing has
provided in response to Defendants' motion, (see
Highpoint Application & Annual Reports, Ex. F to Resp.
[Doc. #22-6]), classify this case as an exceptional one.
Long-standing precedent forecloses Debbie's
Staffing's argument that general jurisdiction exists over
Highpoint in North Carolina because of its Certificate of
Authority and registered agent. See Public Impact, LLC v.
Boston Consulting Grp, Inc., 117 F.Supp.3d 732, 738
(M.D. N.C. 2015). In Ratliff v. Cooper Laboratories,
Inc., 444 F.2d 745, 748 (1971), the Fourth Circuit Court
of Appeals explained,
We think the application to do business and the appointment
of an agent for service to fulfill a state law requirement is
of no special weight . . . . Applying for the privilege of
doing business is one thing, but the actual exercise of that
privilege is quite another. The principles of due process
require a firmer foundation than mere compliance with the
state domestication statutes.
also Public Impact, LLC, 117 F.Supp.3d at 738 (citing
district courts within the Fourth Circuit applying
Ratliff and finding that circuit law
“forecloses Public Impact's argument that this
court has general jurisdiction over BCG because it is
registered to do business in this State”). Highpoint
simply does not have continuous and systematic affiliations
with North Carolina that render it at home in the state.
same is true for Wood. He is domiciled in Texas and is not
alleged to have taken actions that constitute continuous and
systematic affiliations with North Carolina. The general
allegation that “representatives of Defendants” -
as used in the Complaint, this includes all three defendants
- “upon information and belief” “traveled
to North Carolina in furtherance of relationships with . . .
other clients with operations of domicile in North
Carolina” cannot sustain the exercise of general
jurisdiction over Wood. See Vision Motor Cars, Inc. v.
Valor Motor Co., 981 F.Supp.2d 464, 471 (M.D. N.C. 2013)
(refusing to consider conclusory allegations that made
“few specific factual assertions as to any particular
defendant's contacts with North Carolina”).
response to Defendants' motion, Debbie's Staffing
provided evidence that, as Highpoint's sole member and
manager, Wood applied for Highpoint's Certificate of
Authority, filed its annual reports, and withdrew its
Certificate of Authority. (Highpoint Texas Articles of
Organization, Ex. A to Resp. [Doc. #22-1], Highpoint Texas
Business Inquiry, Ex. B to Resp. [Doc. #22-2], Highpoint
Application & Annual Reports.) He also applied for a
Certificate of Authority on behalf of AMS Staff Leasing, Inc.
and filed its annual reports for approximately nine years as
its sole member. (AMS Staff Leasing, Inc. Application &
Annual Reports, Ex. G to Resp. [Doc. #22-7].) However,
“[g]eneral actions by [an officer] on behalf of the
corporation will not generally subject [him] to an
out-of-state court's jurisdiction.” AARP v. Am.
Family Prepaid Legal Corp., Inc., 604 F.Supp.2d 785, 799
(M.D. N.C. 2009) (quoting Mkt. Am. v. Optihealth Prods.,
Inc., No. 1:07CV855, 2008 WL 5069802, at *8 (M.D. N.C.
Nov. 21, 2008), adopted, (M.D. N.C. Jan. 6, 2009)).
As with Highpoint, Wood cannot be found to be at home in
North Carolina. Therefore, the Court cannot exercise general
jurisdiction over either Highpoint or Wood.
next argue that neither Debbie's Staffing's
allegations nor supporting evidence permit the Court to
exercise specific jurisdiction over them. “Specific
jurisdiction is very different” from general
jurisdiction. Bristol-MyersSquibb Co. v.
Superior Ct. of Cal., San Francisco Cty., U.S., 137
S.Ct. 1773, 1780 (2017). It exists when the forum state
exercises personal jurisdiction over the defendant “in
a suit arising out of or related to the defendant's
contacts with the forum[.]” Helicopteros Nacionales
de Colombia, S.A., 466 U.S. at 414 n.8. “[T]here
must be an ‘affiliation between the forum and the
underlying controversy, principally, [an] activity or an
occurrence that takes place in the forum State.'”
Bristol-Myers Squibb Co., 137 S.Ct. at 1780 (quoting
Goodyear, 564 U.S. ...