DeSoto Trail, Inc. v. COVINGTON DIESEL

335 S.E.2d 794 (1985)

DeSOTO TRAIL, INC.
v.
COVINGTON DIESEL, INC., General Motors Corporation, and Penske GM Power, Inc.

No. 8530SC164.

Court of Appeals of North Carolina.

November 5, 1985.

Baley, Baley, Clontz & Schumacher, P.A. by Stanford K. Clontz, Asheville, for plaintiff.

Van Winkle, Buck, Wall, Starnes and Davis, P.A. by Allan R. Tarleton, Asheville, for defendant Penske GM Power.

WELLS, Judge.

The gravamen of plaintiff's first six assignments of error is that the trial court erred in concluding as a matter of law that defendant Penske had insufficient minimum contacts with North Carolina to permit the court to exercise in personam jurisdiction. To determine if foreign defendants may be subjected to in personam jurisdiction in this State, we apply a two-pronged test. First, we determine whether North Carolina jurisdictional statutes allow our courts to entertain the action. Second, we determine whether our courts can constitutionally exercise such jurisdiction consistent with due process of law. Marion v. Long, 72 N.C.App. 585, 325 S.E.2d 300 (1985).

Statutory jurisdiction arises under N.C.Gen.Stat. § 1-75.4 (1983), the North Carolina "long-arm" statute. This statute should be construed liberally, in favor of finding jurisdiction. Leasing Corp. v. Equity Associates, 36 N.C.App. 713, 245 S.E.2d 229 (1978). The burden is on the plaintiff to establish prima facie that one of the statutory grounds applies. Marion v. Long, supra. Plaintiff contends that, under the alleged facts, "[p]roducts, materials, or thing[s] processed, serviced or manufactured by the defendant were used or consumed, within this State in the ordinary course of trade." G.S. 1-75.4(4)(b). Construing the statute liberally, we find that the engine installed in plaintiff's truck by Penske was a product serviced by Penske and used within this State by plaintiff in the ordinary course of trade; therefore, there were statutory grounds for the exercise of jurisdiction.

The exercise of statutory jurisdiction must meet the test of constitutional due process, requiring the defendant to have sufficient minimum contacts with the forum state to ensure that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945).

Minimum contacts do not arise ipso facto from actions of a defendant having an effect in the forum state. Kulko v. Superior Court, 436 U.S. 84, 56 L. Ed. 2d 132, 98 S. Ct. 1690 ... (1978). There must be some act or acts by which the defendant purposely availed himself of the privilege of doing business there, Hanson v. Denckla, 357 U.S. 235, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 ... (1958), such that he or she should reasonably anticipate being haled into court there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980).

Ciba-Geigy Corp. v. Barnett, 76 N.C.App. 605, 334 S.E.2d 91 (1985).

Even accepting plaintiff's allegations as true, there is no showing that plaintiff's contract with Penske for the engine had any relationship to this State in the way of a site for performance, a site for tender or as a legal forum. Penske's place of business is New Jersey and the widest possible characterization of its service area would be the states of New Jersey, New York, Texas, Pennsylvania and Massachusetts. Penske has no sales representatives or service centers in North Carolina and does not advertise here. It is not licensed to do business in this State. Clearly, Penske's activities were not such that it could reasonably anticipate being hauled into court here. See Marion v. Long, supra.

Plaintiff contends that Penske had been "drinking heavily from the waters of the stream of interstate commerce" by associating itself with General Motors' nationwide manufacturing network. This argument is without merit. There is no evidence that Penske ever took any action purposefully to avail itself of the privilege of conducting activities within the forum of North Carolina. See Sola Basic Industries v. Electric Membership Corp., 70 N.C.App. 737, 321 S.E.2d 28 (1984), citing Hanson v. Denckla, supra.

Finally, plaintiff contends that the dismissal as to Penske effectively precludes plaintiff from litigating its claims and exercising its right to "have remedy by due course of law" under N.C. Const. art. 1, § 18. Plaintiff's claim against Penske for improper installation is separate and distinct from the claims against GM and Covington for breach of warranties. Dismissal of the Penske claim should not prejudice plaintiff's other claims. In any case, plaintiff's procedural orientation may not dictate a finding of minimum contacts when minimum contacts do not exist on the facts.

Affirmed.

ARNOLD and MARTIN, JJ., concur.