Thimbler, Inc. v. Unique Solutions Design, Ltd.

Filing 28

ORDER denying as Moot 21 Motion to Strike, granting in part and denying in part 22 Motion to Amend/Correct, granting 11 Motion to Dismiss for Lack of Jurisdiction and denying 14 Motion To conduct jurisdictional discovery. Signed by Senior Judge W. Earl Britt on 9/11/2013. (Marsh, K)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:12-CV-695-BR
THIMBLER, INC.,
Plaintiff,
v.
UNIQUE SOLUTIONS DESIGN, LTD.,
Defendant.

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ORDER

This matter is before the court on the following motions: (1) the 11 January 2013 motion
to dismiss (DE # 11) filed by defendant Unique Solutions Design, Ltd. (“Unique Canada”); (2)
the 21 February 2013 motion to conduct jurisdictional discovery (DE # 14) filed by plaintiff
Thimbler, Inc. (“Thimbler”); (3) Unique Canada’s 29 May 2013 motion to strike (DE # 21); and
(4) Thimbler’s 3 July 2013 motion to amend the complaint (DE # 22). The period to respond
and reply to these motions has elapsed, and the matters are now ripe for disposition.
I. BACKGROUND
Thimbler is a North Carolina corporation. (Compl., DE # 1, ¶ 1.) Unique Canada is a
foreign corporation having its office and principal place of business in Halifax, Nova Scotia. (Id.
¶ 2.) Thimbler alleges that it entered into a contract with Unique Canada on 16 December 2010,
pursuant to which Thimbler would manufacture Intellifit 3D body scanners (“scanners”) in
China and provide them to Unique Canada for a price not to exceed $12,000 per unit. (Id. ¶ 5 &
Ex. 1, DE # 1-1.) The contract contains a choice of law provision stating that the law of Nova
Scotia shall apply. (Id.) Pursuant to the agreement, Thimbler has produced and delivered
ninety-seven scanners to Unique Canada. (Compl., DE # 1, ¶ 6.) As a result, Thimbler alleges

that Unique Canada became indebted to Thimbler in the amount of $456,219.46. (Id. ¶ 7.)
Despite demand from Thimbler, Unique Canada has failed to pay Thimbler the aforesaid
amount. (Id. ¶ 8.) Because Unique Canada has failed to make payment, Thimbler is presently
storing thirteen additional scanners to be shipped. (Id. ¶ 6.)
Thimbler commenced this action on 22 October 2012. It seeks a judgment in the amount
of $456,219.46, interest, and expenses for the transportation and storage of the unshipped
scanners. (Id. at 2, Prayer for Relief.) On 11 January 2013, Unique Canada filed a motion to
dismiss the complaint for lack of personal jurisdiction. (DE # 11.) On 21 February 2013,
Thimbler filed a response to the motion to dismiss and also filed a motion to conduct
jurisdictional discovery. (DE ## 14-15.) On 25 March 2013, Unique Canada filed a single
document containing its reply to the motion to dismiss and its response to the motion for
jurisdictional discovery. (DE # 18.)
On 16 May 2013, Thimbler filed an amended complaint. (DE # 19.) On 29 May 2013,
Unique Canada filed a motion to strike the amended complaint. (DE # 21.) Thimbler did not
respond to the motion to strike. On 3 July 2013, Thimbler filed a motion to amend the
complaint. (DE # 22.) Unique Canada filed a response on 7 August 2013. (DE # 26.) Thimbler
did not file a reply.
II. DISCUSSION
A.

Unique Canada’s Motion to Strike
Thimbler initially filed its amended complaint on 16 May 2013. (DE # 19.) On 29 May

2013, Unique Canada filed a motion to strike the amended complaint, arguing that Thimbler did
not seek leave of the court or Unique Canada’s consent before filing that complaint. (DE # 21.)

2

Thimbler subsequently filed a formal motion to amend the complaint, to which Unique Canada
responded. (DE ## 22, 26.) Because Unique Canada has now been afforded a proper
opportunity to oppose the amended complaint and because the court has determined that
Thimbler may amend its complaint to add a quantum meruit claim against Unique USA, see
discussion, infra, at 10-12, the motion to strike the amended complaint will be denied as moot.
B.

Thimbler’s Motion to Amend the Complaint
The court next addresses Thimbler’s motion to amend the complaint. In the amended

complaint (DE # 19), Thimbler seeks to amend the breach of contract claim1 asserted against
Unique Canada in the original complaint by adding factual allegations. Thimbler also moves to
amend the complaint in order to add Unique Canada’s subsidiary, Unique Solutions Design
USA, Ltd. (“Unique USA”), as a defendant to this lawsuit and to add two new causes of action.
Federal Rule of Civil Procedure 15 instructs that a court “should freely give leave [to
amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “This liberal rule gives effect to the
federal policy in favor of resolving cases on their merits instead of disposing of them on
technicalities.” Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006) (en banc). Thus, “leave to
amend a pleading should be denied only when the amendment would be prejudicial to the
opposing party, there has been bad faith on the part of the moving party, or the amendment
would have been futile.” Id. (citation and internal quotation marks omitted); see also Foman v.
Davis, 371 U.S. 178, 182 (1962). An amendment is futile if it cannot withstand a motion to
dismiss. See Perkins v. United States, 55 F.3d 910, 917 (4th Cir. 1995).

1

Although Thimbler does not actually use the words “breach of contract” in the original complaint, it is
nonetheless clear that the gravamen of that complaint is a breach of contract dispute. Furthermore, Thimbler has
specifically labeled the claim as one for breach of contract in its amended complaint. (Am. Compl., DE # 19, at 5.)

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1. Breach of contract claim and Unique Canada’s motion to dismiss
Thimbler’s first cause of action in the amended complaint is a revised version of the same
breach of contract claim contained in the original complaint. (Am. Compl., DE # 19, ¶¶ 33-39.)
Unique Canada filed a motion to dismiss the original breach of contract claim pursuant to
Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. (DE # 11.) Thimbler
opposed that motion directly (DE ## 15-16) but then subsequently filed a motion to amend the
complaint (DE # 22). Unique Canada argues that while the amended complaint now
incorporates allegations that Thimbler made in its memorandum in opposition to Unique
Canada’s motion to dismiss (see DE ## 15-16), it does not add any new fact or allegation that
would alter the jurisdictional analysis and does not cure the jurisdictional defects asserted in the
motion to dismiss. Thus, Unique Canada maintains that its motion to dismiss should be granted
and that Thimbler’s motion to amend the complaint should be denied as futile with respect to the
breach of contract claim.
In this case, Thimbler has the burden of establishing personal jurisdiction by a
preponderance of the evidence. See Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334
F.3d 390, 396 (4th Cir. 2003); In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997). In
determining whether personal jurisdiction exists, the court may consider evidence outside the
pleadings, such as affidavits and other evidentiary materials. See IHFC Props., LLC v. APA
Mktg., Inc., 850 F. Supp. 2d 604, 616 (M.D.N.C. 2012); Med-Therapy Rehab. Servs., Inc. v.
Diversicare Corp. of Am., 768 F. Supp. 513, 516 (W.D.N.C. 1991) (citing Thompson v. Chrysler
Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985)). Generally, when a district court decides the
issue of personal jurisdiction without holding an evidentiary hearing, the plaintiff need only

4

make a prima facie showing of personal jurisdiction, and the court is to construe the pleadings,
affidavits, and other supporting documents in the light most favorable to plaintiff by assuming
credibility and drawing all inferences and resolving all factual disputes in the plaintiff’s favor.
See Masselli & Lane, PC v. Miller & Schuh, PA, No. 99-2440, 2000 WL 691100, at *1 (4th Cir.
May 30, 2000); Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993); Combs v.
Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
Unique Canada is a foreign corporation having its office and principal place of business
in Halifax, Nova Scotia. In order for a district court to exercise personal jurisdiction over a nonresident defendant such as Unique Canada, two conditions must be satisfied: (1) the exercise of
jurisdiction must be authorized by the forum state’s long-arm statute; and (2) such exercise must
also comport with the Due Process Clause of the Fourteenth Amendment to the United States
Constitution. See Christian Sci. Bd. of Dirs. of First Church of Christ v. Nolan, 259 F.3d 209,
215 (4th Cir. 2001). North Carolina’s long-arm statute, N.C. Gen. Stat. § 1-75.4, extends its
reach to the outer limits of due process. Id. Thus, the court’s inquiry collapses into a
determination of whether asserting personal jurisdiction is permissible under the Due Process
Clause. Id.; see also, e.g., Hanes Cos., Inc. v. Ronson, 712 F. Supp. 1223, 1226 (M.D.N.C.
1988).
Under the Due Process Clause, personal jurisdiction over Unique Canada is proper only
if (1) Unique Canada has purposefully established “minimum contacts” with North Carolina; and
(2) the exercise of jurisdiction would comport with “traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation and
internal quotation marks omitted); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-

5

78 (1985). The “minimum contacts” required by due process differ depending on whether
“specific” or “general” personal jurisdiction is asserted. Specific jurisdiction exists when the
lawsuit arises out of the defendant’s contacts with the forum state. General jurisdiction exists
when the lawsuit does not arise out of the defendant’s activities in the forum state, but rather the
defendant had continuous and systematic contacts with the forum. See Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984); ESAB Grp., Inc. v. Centricut, Inc., 126
F.3d 617, 623-24 (4th Cir. 1997); Tubular Textile Mach. & Compax Corp. v. Formosa Dyeing &
Finishing, Inc., No. 4:96CV00391, 1997 WL 33150812, at *4 (M.D.N.C. Jan. 29, 1997). In this
case, Thimbler does not argue that this court has general jurisdiction over Unique Canada. (See
Pl.’s Mem. Opp’n Mot. Dismiss, DE # 15, at 5.) Thus, the court will limit its discussion to
specific jurisdiction.
The exercise of specific personal jurisdiction focuses on the relationship between the
defendant, the forum, and the litigation. See Shaffer v. Heitner, 433 U.S. 186, 204 (1977). To
determine the existence of specific jurisdiction, a court considers: “(1) the extent to which the
defendant ‘purposefully avail[ed]’ itself of the privilege of conducting activities in the State; (2)
whether the plaintiff[’s] claims arise out of those activities directed at the State; and (3) whether
the exercise of personal jurisdiction would be constitutionally ‘reasonable.’” ALS Scan, Inc. v.
Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002) (first alteration in original)
(citation omitted); see also Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th
Cir. 2009); Carefirst of Md., Inc., 334 F.3d at 397.
The first of these three prongs articulates the minimum contacts requirement of
constitutional due process that a defendant purposefully avail himself of the privilege of

6

conducting business under the laws of the forum state. Consulting Eng’rs Corp., 561 F.3d at
278. The aim of the minimum contacts requirement is that a non-resident defendant’s conduct is
such that he should reasonably anticipate being haled into the courts of the forum state. WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). “[T]he mere unilateral activity
of those who claim some relationship with a nonresident defendant cannot satisfy the
requirement of contact with the forum State.” Id. at 298 (citation and internal quotation marks
omitted). In addition, a contract between an out-of-state party and a North Carolina resident
does not automatically establish minimum contacts; rather, the contract must have a substantial
connection with North Carolina to form the basis of personal jurisdiction. See, e.g., CFA Med.,
Inc. v. Burkhalter, 383 S.E.2d 214, 216 (N.C. Ct. App. 1989).
Courts have considered various nonexclusive factors in the business context to determine
whether a defendant purposefully availed itself of the privilege of conducting activities in the
forum state. See Consulting Eng’rs Corp., 561 F.3d at 278. These factors include, but are not
limited to: (1) whether the defendant maintains offices or agents in the forum state; (2) whether
the defendant owns property in the forum state; (3) whether the defendant reached into the forum
state to solicit or initiate business; (4) whether the defendant deliberately engaged in significant
or long-term business activities in the forum state; (5) whether the parties contractually agreed
that the law of the forum state would govern disputes; (6) whether the defendant made in-person
contact with the resident of the forum in the forum state regarding the business relationship; (7)
the nature, quality, and extent of the parties’ communications about the business being
transacted; and (8) whether the performance of contractual duties was to occur within the forum.
Id.

7

Here, Unique Canada does not own property in North Carolina. (T. Shaw Decl., DE #
18-1, ¶ 6.) In addition, Unique Canada did not initiate the contract negotiations with Thimbler.
(Id. ¶ 2.) Rather, Thimbler’s President, Charles Tse (“Tse”), reached out to Unique Canada to
set up an in-person meeting in Halifax, Nova Scotia. (Id.) See CFA Med., Inc., 383 S.E.2d at
216 (“Which party initiates the contact is taken to be a critical factor in assessing whether a nonresident defendant has made ‘purposeful availment.’”). Moreover, according to the terms of the
contract, the scanners were to be manufactured by Thimbler not in the forum state, but in China.
(Contract, DE # 1-1, ¶ 1; I. Wilkie Decl., DE # 11-1, ¶ 5.) The parties also expressly chose the
law of Nova Scotia to govern the contract. (Contract, DE # 1-1, ¶ 32; I. Wilkie Decl., DE # 111, ¶ 5.) See Tejal Vyas, LLC v. Carriage Park, Ltd. P’ship, 600 S.E.2d 881, 887 (N.C. Ct. App.
2004) (“While choice of law clauses are not determinative of personal jurisdiction, they express
the intention of the parties and are a factor in determining whether minimum contacts exist and
due process was met.”), aff’d 608 S.E.2d 751 (N.C. 2005) (per curiam). All of these factors
demonstrate that Unique Canada has not purposefully availed itself of the privilege of
conducting activities in North Carolina.
Thimbler argues that representatives and employees of Unique Canada called Tse at his
Raleigh, North Carolina location and occasionally sent mail and parts to his Raleigh address.
(Pl.’s Mem. Opp’n Mot. Dismiss, DE # 15, at 3; Am. Compl., DE # 19, ¶ 23.) As Thimbler does
not specify the number of phone calls between Unique Canada and Tse and also does not provide
any elaboration on how the correspondences related to Thimbler’s claim against Unique Canada,
this factor is insufficient to establish personal jurisdiction. See, e.g., Consulting Eng’rs Corp.,
561 F.3d at 279 n.5 (“[T]he mere fact that emails, telephone calls, and faxes were employed does

8

not, of itself, alter the minimum contacts analysis. The analysis must focus on the nature,
quality, and quantity of the contacts, as well as their relation to the forum state.”). In addition,
Unique Canada’s occasional mailing of items to Tse in North Carolina is not a basis for
establishing personal jurisdiction because the mailings were not provided for in the contract, and
they occurred only because Tse was in North Carolina rather than in China at the time of the
shipment. (See Contract, DE # 1-1; J. Gould-Thorpe Decl., DE # 11-2, ¶ 4.)
Thimbler also heavily emphasizes the fact that scanners produced by Thimbler have been
installed in North Carolina locations either by Unique Canada or by its subsidiary Unique USA
and that Tse personally viewed the scanners in the North Carolina locations and interviewed the
operators of those scanners. (See, e.g., Pl.’s Mem. Opp’n Mot. Dismiss, DE # 15, at 2-6; Am.
Compl., DE # 19, ¶¶ 7, 9-11, 17-21.) In arguing that these facts establish minimum contacts,
Thimbler relies upon the “stream of commerce” doctrine recently discussed by the Supreme
Court in J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). (See Pl.’s Mem.
Opp’n Mot. Dismiss, DE # 15, at 5.) The Supreme Court has stated that “placing goods into the
stream of commerce ‘with the expectation that they will be purchased by consumers within the
forum State’ may indicate purposeful availment” of that state’s laws and that personal
jurisdiction over a non-resident defendant is appropriate “where the defendant can be said to
have targeted the forum” with its goods. Id. at 2788 (plurality) (quoting World-Wide
Volkswagen Corp., 444 U.S. at 298).
Regardless of whether the scanners were placed in North Carolina by Unique Canada or
by Unique USA, the court sees no similarity between this case and “stream of commerce” cases,
which usually arise in the products liability context. This is not a case of a corporation placing

9

its products into the stream of commerce to be purchased by general consumers. Moreover,
Thimbler is not before the court because of any personal injury caused by the placement or use
of the scanners in North Carolina. Rather, this is a case where Thimbler is asserting the
existence of a bargained-for contract between it and Unique Canada, and any injury is directly
attributable to the failure to comply with that alleged contract. Any duty that may have been
breached by Unique Canada was a duty arising out of the purported contract, which does not
have a substantial connection to North Carolina. The court further notes that the contract does
not contemplate the placement of the scanners following their manufacture in China and their
delivery to Unique Canada. (Contract, DE # 1-1.) As a result, the stream of commerce doctrine
is inapplicable here. For the same reasons and contrary to Thimbler’s assertions (see Pl.’s Mem.
Opp’n Mot. Dismiss, DE # 15, at 6), this action cannot be said to arise out of Unique Canada’s
contacts with the forum state.
After considering and weighing the evidence in the record, the court concludes that
exercising specific personal jurisdiction over Unique Canada would violate the Due Process
Clause. Because the court lacks personal jurisdiction over Unique Canada with respect to the
breach of contract claim, Thimbler’s motion to amend that claim must be denied as futile, and
Unique Canada’s motion to dismiss will be granted.
2. Quantum meruit claim
The second cause of action in the amended complaint is brought against Unique USA,
whom Thimbler now seeks to add as a defendant to this lawsuit. Thimbler alleges that Unique
USA is a wholly-owned subsidiary of Unique Canada. (Am. Compl., DE # 19, ¶ 7.) The
amended complaint asserts a quantum meruit claim against Unique USA based on its alleged

10

receipt of scanners from Unique Canada and on its failure to pay adequate consideration for the
scanners. (Id. ¶¶ 40-45.)
Quantum meruit serves as an equitable remedy to prevent unjust enrichment when there
is no express contract. Whitfield v. Gilchrist, 497 S.E.2d 412, 414-15 (N.C. 1998). To recover
in quantum meruit, a plaintiff must show that (1) services were rendered to the defendant; (2) the
services were knowingly and voluntarily accepted; and (3) the services were not given
gratuitously. Scott v. United Carolina Bank, 503 S.E.2d 149, 152 (N.C. Ct. App. 1998), disc.
rev. denied, 528 S.E.2d 584 (N.C. 1999). “Quantum meruit claims require a showing that both
parties understood that services were rendered with the expectation of payment.” Id. The
measure of recovery under quantum meruit is the reasonable value of the services provided.
Whitfield, 497 S.E.2d at 414.
Unique Canada argues that Thimbler’s quantum meruit claim against Unique USA
should be deemed futile as a matter of law because it relates to amounts that Thimbler claims to
be owed under an express contract. Unique Canada contends that recovery on an express
contract theory precludes recovery in quantum meruit where both claims are based on the same
subject matter. (See Def.’s Mem. Opp’n Pl.’s Mot. for Leave to File Am. Compl., DE # 26, at 56.)
This argument is plainly premature. Rule 8(d) of the Federal Rules of Civil Procedure
explicitly permits a party to make alternate and inconsistent claims.2 At the pleading stage,

2

Although Thimbler’s quantum meruit claim is not pled in the alternative to its breach of contract claim,
the court has a duty to construe the complaint liberally and will therefore deem quantum meruit to be an alternative
theory of Thimbler moving forward. See, e.g., TSC Research, LLC v. Bayer Chems. Corp., 552 F. Supp. 2d. 534,
540 (M.D.N.C. 2008) (plaintiff asserting claims for breach of contract and quantum meruit was not required to use
any specific words to indicate that it was pleading claims in the alternative).

11

Thimbler is not required to guess whether it will be successful on its contract claim or its quasicontract claim. See, e.g., River’s Edge Pharms., LLC v. Gorbec Pharms. Servs., Inc., No.
1:10CV991, 2012 WL 1439133, at *19 (M.D.N.C. Apr. 25, 2012) (“While a party cannot
recover under both a claim for breach of contract and a claim for unjust enrichment, a party may
pursue alternative claims at the motion to dismiss stage of the litigation.”); James River Equip.,
Inc. v. Mecklenburg Utils., Inc., 634 S.E.2d 557, 560 (N.C. Ct. App. 2006) (“It is
well-established that ‘[l]iberal pleading rules permit pleading in the alternative,’ and that [breach
of express contract and quantum meruit] theories may be pursued in the complaint even if
plaintiff may not ultimately be able to prevail on both.” (first alteration in original) (citation
omitted)), appeal dismissed and disc. rev. denied, 644 S.E.2d 226 (N.C. 2007). Furthermore, the
quantum meruit claim is viable at this stage of the proceedings because the existence of an
enforceable contract has not been conclusively established.3 See, e.g., Lewis v. Ceralvo
Holdings, LLC, Civ. A. No. 4:11-CV-00055-JHM, 2012 WL 32607, at *6 (W.D. Ky. Jan. 6,
2012) (denying defendant’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
and allowing plaintiff to plead alternate claims of breach of contract and unjust enrichment
where “at this early stage of litigation, it is unclear whether the contract is valid and
enforceable”). As a result, Unique Canada has failed to show that Thimbler’s quantum meruit
claim against Unique USA is futile, and Thimbler’s motion to amend the complaint will be
granted with respect to this claim.

3

The court notes that Unique Canada’s potential defenses to Thimbler’s breach of contract claim are
unknown because it did not file an answer to the original complaint. Instead, it chose to file a motion to dismiss for
lack of personal jurisdiction. See, e.g., Willow Run Foods Inc. v. New World Rest. Grp., No. 3:06-CV-0425, 2006
WL 1228853, at *1 (N.D.N.Y. May 4, 2006) (finding that it was premature to dismiss plaintiff’s claim for unjust
enrichment pursuant to Federal Rule of Civil Procedure 12(b)(6) where defendant had not submitted an answer
admitting to the existence of a valid and enforceable contract).

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3. Uniform Fraudulent Transfer Act claims
Thimbler’s third cause of action in the amended complaint is brought against Unique
Canada and Unique USA under North Carolina’s Uniform Fraudulent Transfer Act (“UFTA”),
N.C. Gen. Stat. § 39-23.1 et seq. The UFTA allows a creditor to bring a civil action against a
debtor for certain transfers made by the debtor. N.C. Gen. Stat. § 39-23.7. In this case,
Thimbler’s UFTA claims are based on the alleged transfer of the scanners at issue from Unique
Canada to Unique USA. Here, even if the court could assert personal jurisdiction over Unique
Canada,4 it would still deny the motion to amend as to this cause of action. The amendment is
futile as to both defendants because it fails to state a claim upon which relief can be granted.
The sufficiency of a fraudulent transfer claim is judged in accordance with the notice
pleading requirement of Federal Rule of Civil Procedure 8(a), which requires a “short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The
complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. Furthermore, allegations pertaining to actual fraud are subject
to the heightened pleading standard set forth in Rule 9(b) of the Federal Rules of Civil
Procedure, which requires that fraud be pled with particularity. See, e.g., Angell v. C.A. Perry &

4

When specific jurisdiction is asserted, jurisdiction must be established for each claim alleged. See N.C.
Mut. Life Ins. Co. v. McKinley Fin. Serv., Inc., 386 F. Supp. 2d 648, 656 (M.D.N.C. 2005) (citing Sunward Elecs.,
Inc. v. McDonald, 362 F.3d 17, 24 (2d Cir. 2004)); 4A Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 1069.7 (3d ed. 2002) (“[I]t is important to remember that a plaintiff also must secure personal
jurisdiction over a defendant with respect to each claim she asserts.”).

13

Son, Inc. (In re Tanglewood Farms, Inc. of Elizabeth City), No. 12-00189-8-JRL, 2013 WL
1405757, at *6 (Bankr. E.D.N.C. Apr. 4, 2013).
Under the UFTA, a transfer is actually fraudulent if it is made with the intent to hinder,
delay, or defraud a creditor of the debtor. N.C. Gen. Stat. § 39-23.4(a)(1). To set forth a claim
for actual fraudulent transfer, Thimbler must state with specificity the factual circumstances
constituting the alleged fraud. See Ivey v. First-Citizens Bank & Trust Co. (In re Whitley), No.
12-02028, 2013 WL 486782, at *13 (Bankr. M.D.N.C. Feb. 7, 2013). “Generally, to do this, the
complaint must allege (1) the property subject to the transfer, (2) the timing and, if applicable,
frequency of the transfers and (3) the consideration paid with respect thereto.” Id. (stating this
rule as applied to the Bankruptcy Code, and noting the “similar[ity] in form and substance,” id.
at *12, to North Carolina’s fraudulent transfer statute at N.C. Gen. Stat. § 39-23.4(a)(1)).
Thimbler has not provided sufficient details regarding these elements. For example, the
amended complaint does not identify the date of the transfer of the scanners or the relationship
between the timing of the transfer and the date that Thimbler’s claim arose. Overall, Thimbler
has failed to inject any measure of substantiation into its allegations regarding the factual
circumstances surrounding the fraud. See Angell v. Meherrin Agric. & Chem. Co. (In re
Tanglewood Farms, Inc. of Elizabeth City), No. 12-00186-8-JRL, 2013 WL 1405729, at *9
(Bankr. E.D.N.C. Apr. 8, 2013) (plaintiff failed to allege UFTA claim with particularity under
Federal Rule of Civil Procedure 9(b) where the complaint was “devoid of any description of the
conduct constituting fraud”).
Furthermore, Thimbler has failed to properly plead intent. The second sentence of Rule
9(b) provides that “[m]alice, intent, knowledge, and other conditions of a person’s mind may be

14

alleged generally.” Fed. R. Civ. P. 9(b). Accordingly, a plaintiff need not plead intent with the
same particularity required of the circumstances constituting the alleged fraudulent conveyances.
Nevertheless, in this case Thimbler’s claim for actual fraudulent transfer under N.C. Gen. Stat. §
39-23.4(a)(1) consists of nothing more than the bare assertion that Unique Canada and Unique
USA conducted a transfer of the scanners involved in this case “with the intent to hinder, delay
or defraud Plaintiff[].” (Am. Compl., DE # 19, at 7 ¶ 51(a) (misnumbered as ¶ 40(a).) This does
not state a plausible claim under Federal Rule of Civil Procedure 8(a)(2). See Oliver v. Cooper
(In re Bateman), No. 11-00397-8-RDD, 2012 WL 1110080, at *3 (Bankr. E.D.N.C. Apr. 2,
2012) (plaintiff’s conclusory allegation that “[t]he transfer of the Property was intended to
hinder, delay, or defraud creditors” failed to set forth sufficient facts supporting the allegation of
fraud under Federal Rule of Civil Procedure 8(a)). As a result, Thimbler’s claim for actual
fraudulent transfer is futile because it fails to state a claim upon which relief can be granted.
In addition, Thimbler has failed to state a claim for constructive fraudulent transfer.
“Constructively fraudulent transfers, in contrast to those based on actual fraud, focus on the
effect the transfer had on the debtor’s financial condition without regard for the debtor’s state of
mind or intentions.”5 Callaway v. Cimarron Homeowners Ass’n, Inc. (In re Roszkowski), 494
B.R. 671, 678 (Bankr. E.D.N.C. 2013) (alteration, citation, and internal quotation marks
omitted). To plead such a claim under N.C. Gen. Stat. § 39-23.4(a)(2), Thimbler must allege
facts showing that Unique Canada was either engaged in a business transaction for which its
5

Federal Rule of Civil Procedure 9(b), which requires the circumstances of fraud to be stated with
particularity, is not applicable to claims of constructive fraudulent transfer. See Angell v. Augusta Seed Corp. (In re
Tanglewood Farms, Inc. of Elizabeth City), No. 12-00192-8-JRL, 2013 WL 474704, at *3 (Bankr. E.D.N.C. Feb. 7,
2013) (citing Angell v. Ber Care, Inc. (In re Caremerica, Inc.), 409 B.R. 737, 755-56 (Bankr. E.D.N.C. 2009));
Beaman v. Barth (In re AmerLink, Ltd.), No. 10-00164-8-JRL, 2011 WL 1048848, at *3 (Bankr. E.D.N.C. Mar. 18,
2011).

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remaining assets were unreasonably small in relation to the transaction or that Unique Canada
knew debt incurred was beyond its ability to pay. See, e.g., Oliver (In re Bateman), 2012 WL
1110080, at *3. To plead a claim for constructive fraudulent transfer under N.C. Gen. Stat. §
39-23.5, Thimbler must allege facts showing that Unique Canada was insolvent at the time of the
transfer or that Unique Canada became insolvent as a result of the transfer. See, e.g., Miller v.
First Bank, 696 S.E.2d 824, 827 (N.C. Ct. App. 2010).
Here, Thimbler has failed to plead any facts regarding Unique Canada’s financial
condition. As an initial matter, it is important to note that Thimbler has not alleged the date of
the transfer of the scanners, so there is no specified date on which to evaluate Unique Canada’s
solvency. Moreover, Thimbler has only made two conclusory allegations regarding the state of
Unique Canada’s finances. First, Thimbler has alleged that Unique Canada “believed that it
would incur debts beyond its ability to pay as they became due.” (Am. Compl., DE # 19, at 7 ¶
51(b) (misnumbered as ¶ 40(b).) This language is taken directly from N.C. Gen. Stat. §
39-23.4(a)(2)(b), but Thimbler has not included any facts which support this statement. The
second allegation pertaining to this element states that “[u]pon information and belief, at the time
of the transfer, [Unique Canada] was failing to pay creditors as its bills became due and was
insolvent.” (Id. ¶ 52 (misnumbered as ¶ 41).) Despite this assertion, Thimbler identifies no
unpaid creditors other than itself.
The amended complaint contains absolutely no factual information to plausibly show that
Unique Canada’s liabilities exceeded its assets at the time of the transfer. Thus, Thimbler’s
allegations are simply not enough to demonstrate that the transfer of the scanners left Unique
Canada undercapitalized or insolvent. See Oliver (In re Bateman), 2012 WL 1110080, at *3

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(plaintiff’s conclusory allegations that “[u]pon information and belief, the Debtor became
insolvent as a result of the transfer of the Property” and that “debts were incurred beyond the
Debtor’s ability to pay as they became due” held insufficient to draw a reasonable inference that
the debtor was insolvent on the date of the transfer or became insolvent shortly thereafter).
Finally, to adequately plead a violation of N.C. Gen. Stat. § 39-23.5, Thimbler must also
allege that its claim arose before the transfer was made. See Miller, 696 S.E.2d at 827. Here,
Thimbler has not made any allegations regarding the date of delivery of the scanners to Unique
Canada, the date of the transfer of the scanners to Unique USA, or the date on which its claim
arose. Thimbler has only alleged that Unique Canada transferred the scanners “directly” to
Unique USA upon receipt from Thimbler. (Am. Compl., DE # 19, ¶ 29.) Thimbler has also not
set forth the date or dates on which it allegedly satisfied its obligations under the contract, nor
has it alleged when any payments were due under the contract. Its allegations consist of the bare
conclusion that “Thimbler is a ‘creditor’ as defined by the [UFTA].” (Id. ¶ 50.) This selfserving statement is insufficient to allow the court to infer that Thimbler’s claim arose before the
scanners were transferred.
Thimbler’s constructive fraudulent transfer claims consist of a mere recitation of the
statutory elements as conclusory allegations, devoid of any facts or circumstances that would
give rise to a plausible claim.6 Accordingly, Thimbler has not met the requirements of Federal
Rule of Civil Procedure 8(a)(2) and has failed to state a claim for constructive fraudulent transfer

6

The court notes that it has not considered Unique Canada’s additional argument that Thimbler has failed
to state a constructive fraudulent transfer claim under N.C. Gen. Stat. § 39-23.4(a)(2) or § 39.23.5 because it has not
alleged facts that give rise to a plausible inference that Unique Canada did not receive a reasonably equivalent value
in return for the transfer of the scanners to Unique USA. (See Def.’s Mem. Opp’n Pl.’s Mot. for Leave to File Am.
Compl., DE # 26, at 10-11.)

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under N.C. Gen. Stat. § 39-23.4(a)(2) or § 39-23.5. See Iqbal, 556 U.S. at 678. Because
Thimbler’s actual and constructive fraudulent transfer claims are futile, the motion to amend the
complaint will be denied with respect to the third cause of action set forth in the amended
complaint.
C.

Thimbler’s Motion to Conduct Jurisdictional Discovery
On 21 February 2013, Thimbler filed a motion requesting jurisdictional discovery (DE #

14) in response to Unique Canada’s motion to dismiss the breach of contract claim for lack of
personal jurisdiction. Although “[d]iscovery under the Federal Rules of Civil Procedure is broad
in scope and freely permitted,” the Fourth Circuit has recognized that “district courts ‘have broad
discretion in [their] resolution of discovery problems that arise in cases pending before [them].’”
Carefirst of Md., Inc., 334 F.3d at 402 (second and third alterations in original) (quoting Mylan
Labs., 2 F.3d at 64). Moreover, “[w]hen a plaintiff offers only speculation or conclusory
assertions about contacts with a forum state, a court is within its discretion in denying
jurisdictional discovery.” Id.; see also ALS Scan, Inc., 293 F.3d at 716 n.3 (upholding a district
court’s denial of the opportunity to conduct jurisdictional discovery because the plaintiff “failed .
. . to proffer any further facts that it could demonstrate that would be material to the . . .
jurisdictional ruling” and because the plaintiff did not suggest that the jurisdictional facts
asserted by the defendant in its affidavits were inaccurate); Rich v. KIS Cal., Inc., 121 F.R.D.
254, 259 (M.D.N.C. 1988) (“[W]here a plaintiff’s claim of personal jurisdiction appears to be
both attenuated and based on bare allegations in the face of specific denials made by defendants,
the Court need not permit even limited discovery confined to issues of personal jurisdiction
should it conclude that such discovery will be a fishing expedition.”).

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Among other things, Thimbler seeks to conduct jurisdictional discovery regarding “the
relationship agreement between [Unique Canada] and [Unique USA],” “the ownership of the
Scanners,” “who directed the placement of the Scanners,” and “whose employees installed and
maintained them.” (Pl.’s Mem. Opp’n Mot. Dismiss, DE # 15, at 8.) There is no reason to
believe that the additional information sought by Thimbler would alter the specific personal
jurisdiction analysis with respect to Thimbler’s breach of contract claim against Unique Canada.
As has already been discussed, that analysis does not turn on the placement of the scanners in
North Carolina, regardless of whether they were installed there by Unique Canada or by Unique
USA. See discussion, supra, at 9-10. The court concludes that Thimbler’s request for
jurisdictional discovery would amount to nothing more than a fishing expedition. Accordingly,
the motion for jurisdictional discovery will be denied.
III. CONCLUSION
Unique Canada’s motion to dismiss (DE # 11) is GRANTED, and Unique Canada is
DISMISSED from this action. Thimbler’s motion to amend the complaint (DE # 22) is
GRANTED IN PART and DENIED IN PART. Unique USA is hereby added as a defendant to
this action. The case shall proceed only on the quantum meruit claim stated against Unique USA
in the second cause of action of the amended complaint. Thimbler is DIRECTED to submit to
the Clerk summons for issuance to Unique USA. Because the amended complaint has already
been filed at Docket Entry No. 19 and appears to be identical to the version attached to
Thimbler’s motion to amend the complaint at Docket Entry No. 22-1, the amended complaint
need not be refiled. Thimbler’s motion to conduct jurisdictional discovery (DE # 14) is
DENIED. Unique Canada’s motion to strike the amended complaint (DE # 21) is DENIED AS

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MOOT.
This 11 September 2013.

__________________________________
W. Earl Britt
Senior U.S. District Judge

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