Shaw Food Services Co. v. Morehouse College

WELLS, Judge. The sole issue on appeal is whether the trial court erred in denying defendant’s motion to dismiss for lack of personal jurisdiction. “We apply a two step analysis in determining whether our state courts have in personam jurisdiction over non-resident defendants. ‘First, the transaction must fall within the language of the State’s long-arm statute. Second, the exercise of jurisdiction must not violate the due process clause of the fourteenth amendment to the United States Constitution.’ ” Climatological Consulting Corp. v. Trattner, 105 N.C. App. 669, 414 S.E.2d 382 (1992) (quoting Tom Togs, Inc. v. Ben Elias Industries Corp., 318 N.C. 361, 348 S.E.2d 782 (1986)). In the case at bar, the defendant does not contest the trial court’s finding of statutory jurisdiction. Therefore, we need only address whether this assertion of jurisdiction is consistent with the Fourteenth Amendment’s due process guarantee. The Trial Court’s Findings The following is a summary of the trial court’s findings of fact and conclusions of law that are pertinent to this appeal, which Judge Farmer included in the order denying defendant’s motion to dismiss for lack of in personam jurisdiction: In April of 1990, LeRoy Keith, President of Morehouse College, contacted Shaw Food by phone, indicated that Morehouse College [98] was searching for a food service provider for the 1990-1991 school year and beyond, and then solicited and requested Shaw Food to come from its headquarters in North Carolina to Georgia to assess the food services operation at Morehouse College and to submit a proposal with recommendations regarding facility layout, decor, ambience, equipment, etc. In response to Dr. Keith’s request, representatives from Shaw Food’s North Carolina headquarters traveled to Atlanta and began an assessment study of Morehouse College’s dining facilities. On 1 May 1990, Shaw Food forwarded to Morehouse College a report on the results of their operation assessment studies and supplemented that report with a detailed budgetary plan. All feasibility studies and cafeteria designs were developed by Shaw Food in North Carolina and delivered from North Carolina to Morehouse College. This fact was known to Morehouse College. On 14 May 1990, Morehouse College entered into an agreement for food services with Shaw Food and the contract between Shaw Food and Morehouse College specifically indicated that the situs of the contract shall be Cumberland County, North Carolina. On page 15 of the contract, it is specifically stated that, “This contract shall be governed by the laws of the State of North Carolina.” Morehouse College knew that Shaw Food was a North Carolina Corporation and that to fulfill its obligations under the agreement Shaw Food would have to relocate management personnel from North Carolina to Georgia and send or ship vehicles, inventory and equipment. Morehouse College also knew that all administrative support required by Shaw Food in carrying out the contract, (including accounting, payroll, tax withholding, legal affairs, management training, etc.), would be located in North Carolina and that the food services operations would be centrally operated and directed by Shaw Food’s executives, located at Shaw Food’s headquarters in Fayetteville, North Carolina. The contract between Shaw Food and Morehouse College had a substantial connection with the State of North Carolina. Morehouse College benefitted from the laws of North Carolina by, inter alia, entering the market to solicit Shaw Food’s services. Requiring Morehouse College to litigate in the State of North Carolina does not offend notions of fair play and justice and would not violate constitutional due process requirements of the United States and North' Carolina Constitutions. [99] Due Process Analysis Basically, the defendant contends that Morehouse College’s contacts with North Carolina are so attenuated that imposing personal jurisdiction in this State over this defendant offends notions of fair play and substantial justice. We disagree. To satisfy requirements of the due process clause when establishing the existence of a forum state’s jurisdiction over a foreign defendant, there must exist certain minimum contacts between the non-resident defendant and the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. Tom Togs, Inc., supra. “The forum state may exercise jurisdiction over a defendant if there are ‘sufficient continuous and systematic’ contacts between the defendant and the forum state.” Cherry Bekaert & Holland v. Brown, 99 N.C. App. 626, 394 S.E.2d 651 (1990) (quoting Williams v. Institute for Computational Studies, 85 N.C. App. 421, 355 S.E.2d 177 (1987)). “[A] single contract may be a sufficient basis for the exercise of in personam jurisdiction if it has substantial connection with this state.” Id. In the case at bar, the contract itself states the situs of the agreement to be North Carolina and specifies that North Carolina law is to govern. When establishing a forum state’s jurisdiction, “[a] factor in determining fairness concerning a breach of contract cause of action is whether the contract expressly provides that the law of the forum state would apply to actions arising out of the contract.” Id. Secondly, the trial court found that the defendant contacted the plaintiff in North Carolina and solicited the plaintiff to come to Atlanta to develop and submit a proposal for administering food services at the College. Solicitation of business by the foreign defendant in the forum state is a factor to consider when determining whether a particular defendant has established the minimum contact with the forum state to satisfy due process. See Mabry v. Fuller-Shuwayer Co., 50 N.C. App. 245, 273 S.E.2d 509, cert. denied, 302 N.C. 398, 279 S.E.2d 352 (1981). Thirdly, the contract envisioned an ongoing relationship between the defendant and the forum state as the contract’s potential duration was for several years and its daily operation required regular and systematic interaction between the defendant and the [100] plaintiff’s North Carolina headquarters. The fact that the dining facility assessment reports were substantially compiled in North Carolina and that the administrative support and the overall supervision of the dining facilities were centrally located in North Carolina supports the conclusion that the defendant in this case received substantial benefits from its interaction with the forum state. North Carolina has a.legitimate interest in exercising personal jurisdiction over parties to contracts that are formed.in and are to be substantially carried out in North Carolina. Tom Togs, Inc., supra. Lastly, considering that the situs of the contract was North Carolina, the choice of law the contract applied was North Carolina law, and the fact that substantial and necessary elements of the contract’s performance were carried out in North Carolina, the defendant could have reasonably foreseen that disputes arising out of this contractual relationship could well be litigated in North Carolina. For the reasons stated above, we find that forcing the defendant to litigate this contract dispute in North Carolina does not offend notions of fair play and substantial justice. Therefore, the trial court’s order denying defendant’s motion to dismiss for .lack of personal jurisdiction is Affirmed. Chief Judge Hedrick and Judge Arnold concur.