Civil Practice – Jurisdiction – Minimum Contacts – Due Process – Contract

Listen to this article

PPD Development, LP v. Cognition Pharmaceuticals. (Lawyers Weekly No. 10-16-0583, 16 pp.) (Martha A. Geer, J.) Appealed from New Hanover County Superior Court. (Jay D. Hockenbury, J.) N.C. App. Unpub.

Holding: The trial court’s findings of fact supported its conclusion that the defendant had sufficient minimum contacts with N.C. to meet the requirements of due process, such that a denial of the defendant’s motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) was appropriate.

Facts

The defendant is a Delaware LLC with its principal office and place of business in New York. It has no office in N.C. The defendant called the plaintiff in its Wilmington office to express interest in utilizing the plaintiff’s services.

The plaintiff and defendant entered into an agreement under which the plaintiff agreed to provide certain clinical research and other services to the defendant.

The initial drafting of the agreement and its addenda and amendments occurred in the plaintiff’s Wilmington office. The agreement was first signed by the defendant’s representatives in New York and then returned to the plaintiff’s Wilmington office, where it was signed and executed by the plaintiff’s representatives.

During the course of the services identified in the agreement, the defendant’s senior management met with the plaintiff’s representatives four times in the plaintiff’s RTP office.

The plaintiff subsequently filed suit in New Hanover County to collect nearly $1.1 million allegedly owed by the defendant to the plaintiff for services rendered.

The plaintiff stated that the court had personal jurisdiction over the defendant “pursuant to G.S. Sect. 1-75.4 in that the action [arose] out of a contract to pay for services to be performed in whole or in part in North Carolina and the defendant had minimum purposeful contacts with North Carolina.”

The defendant filed a motion to dismiss for lack of personal jurisdiction under N.C. R. Civ. P. 12(b)(2). The trial court denied the defendant’s motion, concluding that G.S. Sect. 1-75.4(5) provided the court with a statutory basis for exercising personal jurisdiction over the defendant because the defendant had sufficient minimum contacts with N.C. to satisfy the requirements of due process.

The defendant appealed.

Discussion

The sole issue before the court is whether the trial court properly concluded that the exercise of jurisdiction over the defendant did not violate due process.

There are two types of personal jurisdiction: specific and general. Specific jurisdiction may be exercised when the controversy arises out of the defendant’s contacts with the forum state. The sole basis asserted for personal jurisdiction in this case is specific jurisdiction.

In cases where specific jurisdiction is at issue, the focus must be on the relationship between the defendant, the forum state, and the cause of action.

In evaluating minimum contacts, we consider: (1) the quantity of the contacts, (2) the nature and quality of the contacts, (3) the source and connection of the cause of action to the contacts, (4) the interest of the forum state and (5) the convenience to the parties. Determining whether the requirements of due process are satisfied necessitates a fact-specific evaluation of each case.

Here, the defendant initiated contact by calling the plaintiff in N.C.

Which party initiates the contact is taken to be a critical factor in assessing whether a nonresident defendant has made purposeful availment of the privilege of conducting activities in this state.

The plaintiff performed substantial services under the contract in N.C. Two of the identified project leaders were based in RTP. Approximately 75 percent of the work was performed in N.C.

The trial court’s findings of fact establish that the parties’ contract had a substantial connection with this state.

Accordingly, the trial court properly concluded that there were sufficient minimum contacts between the defendant and the state of N.C. to justify the court’s exercise of personal jurisdiction over it without violating its due process.

Additionally, on balance, we cannot say that the factors regarding the state’s interest and the convenience to the parties favor one party over the other to the extent that subjecting the defendant to the jurisdiction of N.C.’s courts would be unfair.

We observe that the U.S. Supreme Court has stressed that once the first prong of purposeful minimum contacts is satisfied, the defendant will bear a heavy burden in escaping the exercise of jurisdiction based on other factors.

We therefore hold that the trial court did not err in denying the motion to dismiss for lack of personal jurisdiction.

Affirmed.