United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
Loretta C. Biggs, United States District Judge.
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.
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.)
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.)
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 ¶
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.)
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.) 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.)
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.)
DEFENDANT'S MOTION TO DISMISS
Standard of Review
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-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).
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.
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.)
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).
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 ...