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Pet Specialties, LLC v. Navisiontech, Inc.

United States District Court, M.D. North Carolina

September 30, 2019



          Loretta C. Biggs, United States District Judge.

         Before the Court is Defendant's Motion to Dismiss or, in the alternative, to Transfer Venue. (ECF No. 10.) Defendant's central argument is based on personal jurisdiction. (Id.) For the reasons stated below, the Court will deny Defendant's motion to dismiss and to transfer venue.

         I. BACKGROUND

         Plaintiff, Pet Specialties, is a North Carolina limited liability company with its principal place of business in Chapel Hill, North Carolina. (ECF No. 2 ¶ 1.) It operates three pet supply stores around the Triangle area, with stores located in Chapel Hill, Raleigh, and Cary. (Id. ¶ 10.) It is managed by its sole Member, Frank Papa. (ECF Nos. 12-1 ¶ 2; 2 ¶ 15.) Papa is a North Carolina citizen. (ECF No. 12-1 ¶ 2.)

         Defendant, Navisiontech, is a Florida corporation operated by its president, Gregory Volkov, with its principal place of business in Sarasota, Florida. (ECF No. 15-1 ¶¶ 2, 6.) Navisiontech represents itself as “a leading provider of end-to-end integrated, adaptable [b]usiness [a]pplications.” (Id. ¶ 5.)

         In February 2018, Plaintiff decided to replace its existing retail management system with a new enterprise resource planning (“ERP”) and point of sale (“POS”) system and began to search for a contractor to implement this transition. (ECF No. 12-1 ¶ 7.)[1] LS Nav is a “complete retail management system which includes both ERP and POS.” (ECF No. 2 ¶¶ 12, 14.) While searching for a contractor to implement Plaintiff's transition to a new system, Papa found Defendant through its website. (ECF No. 12-1 ¶ 8.) Some time prior to March 9, 2018, Papa and representatives of Defendant began to discuss Pet Specialties retaining Navisiontech to help the pet store replace its existing management system with LS Nav. (See ECF No. 2 ¶¶ 15-16.) On March 9, 2018, the parties entered into a Client Services and Licensing Agreement (“CSLA”). (Id. ¶ 18.) The CSLA was drafted by Defendant, signed by Volkov, and emailed by Volkov to Papa who executed it and returned it by email to Volkov. (ECF No. 12 at 3.)

         According to Plaintiff's complaint, Papa soon became concerned about Defendant's lack of progress in implementing the transition to LS Nav. (ECF No. 2 ¶ 21.) On October 22, counsel for Plaintiff penned a demand letter to Defendant proposing that Defendant return the $82, 551.59 that Plaintiff had already paid it in exchange for a mutual release of all claims between the parties. (ECF No. 12-2 at 2, 4-5.) One week later, on October 29, 2018, Plaintiff initiated this lawsuit against Defendant in North Carolina state court alleging five causes of action: fraud and fraudulent inducement, unfair and deceptive trade practices, negligent misrepresentation, breach of contract, and breach of the implied covenant of good faith and fair dealing. (ECF Nos. 2 ¶¶ 52-96; 12 at 5-6.)[2] In Plaintiff's Complaint, Defendant is alleged to have billed Plaintiff for 923 hours of services at a cost of $245, 853.99 for the still incomplete transition to LS Nav. (ECF No. 2 ¶¶ 47-48.)

         On November 27, 2018, Defendant removed the case to this Court. (ECF No. 1.) This motion followed in which Defendant argues that Plaintiff's case should be dismissed for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure or, in the alternative, transferred to Florida. (ECF No. 10 at 1.)


         A. Standard of Review

         On a personal jurisdiction challenge, the plaintiff bears the burden of ultimately proving personal jurisdiction by a preponderance of the evidence. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). Where, however, as here, the court decides a pretrial personal jurisdiction motion without conducting an evidentiary hearing-relying instead on the motion papers, supporting legal memoranda, and allegations in the complaint[3]-the plaintiff need only make a prima facie showing of personal jurisdiction. See Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 276 (4th Cir. 2009); Carefirst of Md., 334 F.3d at 396. “[A] plaintiff makes a prima facie showing of personal jurisdiction by presenting facts that, if true, would support jurisdiction over the defendant.” See Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 561 (4th Cir. 2014) (citing Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 862 (9th Cir. 2003)). However, a threshold prima facie finding of jurisdiction does not settle the issue, as the plaintiff “must eventually prove the existence of personal jurisdiction by a preponderance of the evidence, either at trial or at a pretrial evidentiary hearing.” New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 n.5 (4th Cir. 2005) (citation omitted).

         When considering whether the plaintiff has made a prima facie showing of jurisdiction, 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.” Universal Leather, 773 F.3d at 558 (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)); see also Sneha Media & Entm't, LLC v. Associated Broad. Co. P Ltd., 911 F.3d 192, 196 (4th Cir. 2018) (“[W]hen the parties have not yet had a fair opportunity to develop and present the relevant jurisdictional evidence, we have treated the disposition of Rule 12(b)(2) motions to dismiss for a lack of personal jurisdiction in conceptually the same manner as we treat the disposition of motions to dismiss under Rule 12(b)(6).”). “Once a defendant presents evidence indicating that the requisite minimum contacts do not exist, the plaintiff must come forward with affidavits or other evidence in support of its position.” Pathfinder Software, 127 F.Supp.3d at 538 (quoting Vision Motor Cars, Inc. v. Valor Motor Co., 981 F.Supp.2d 464, 468 (M.D. N.C. 2013)). When both sides present evidence, factual conflicts must be resolved in favor of the party asserting jurisdiction for the limited purpose of determining whether a prima facie showing has been made. Id.

         B. Discussion

         Defendant argues that this Court lacks personal jurisdiction over it because it is a “wholly-Florida based company” that preformed “virtually all contractual services” in Florida such that its contacts with the state of North Carolina are merely “ephemeral.” (See ECF Nos. 10 at 1; 15 at 1, 4.) Plaintiff argues in response that this Court has specific personal jurisdiction over Defendant, (ECF No. 12 at 9-17), and argues in support of its claim the following contacts between Defendant and North Carolina:

1. Defendant and Plaintiff agreed to a CSLA that allegedly required “that work would be performed in North Carolina.” (Id. at 13.)
2. The parties had an in-person meeting when Volkov came to North Carolina to meet with Papa and two of his managers. (See ECF Nos. 12-1 ¶ 15; 11-2 ¶ 19.)
3. The parties communicated through emails, phone calls, and online GoToMeeting meetings. (See ECF No. 12-1 ¶¶ 16-17.) Papa calculates that he exchanged 821 emails, 42 GoToMeeting meetings, and dozens of phone calls with Defendant during the course of Pet Specialties' dealings with Navisiontech and that, but for a period in July, while he was traveling abroad, all such emails, meetings, and calls occurred while he was in North Carolina. (Id. ¶¶ 16-18.)
4. Papa also states that “Navisiontech's representatives repeatedly accessed remotely Pet Specialties' computer hardware and software located in North Carolina.” (ECF 12-1 ¶ 15.)

         A federal district court can exercise personal jurisdiction over a nonresident defendant only if “(1) such jurisdiction is authorized by the long-arm statute of the state in which the district court sits; and (2) application of the relevant long-arm statute is consistent with the Due Process Clause of the Fourteenth Amendment.” Universal Leather, 773 F.3d at 558. North Carolina's long-arm statute “permits the exercise of personal jurisdiction over a defendant to the outer limits allowable under federal due process.” Id. (citing N.C. Gen. Stat. § 1- 75.4(1)(d); Dillon v. Numismatic Funding Corp., 231 S.E.2d 629, 630 ( N.C. 1977)). The two-prong test therefore “merges into [a] single question” when North Carolina is the forum state, allowing the court to proceed directly to the constitutional analysis. See Universal Leather, 773 F.3d at 558-59; see also ESAB Grp., Inc. v. Zurich Ins. PLC, 685 F.3d 376, 391 (4th Cir. 2012).

         Under the Due Process Clause of the Fourteenth Amendment, two paths permit a court to exercise personal jurisdiction over a nonresident defendant: general or specific personal jurisdiction. Universal Leather, 773 F.3d at 559. “General personal jurisdiction requires ‘continuous and systemic' contacts with the forum state.” Perdue Foods LLC v. BRF S.A., 814 F.3d 185, 188 (4th Cir. 2016) (citing Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408, 414-16 (1984)). Plaintiff concedes that this Court does not have general jurisdiction over Defendant, claiming instead that this Court has specific personal jurisdiction over Defendant arising from Navisiontech's contacts with North Carolina. (ECF No. 12 at 9.) Specific personal jurisdiction can be exercised over a defendant if that defendant has “purposefully established minimum ...

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