Wright v. First Carolina State Bank
Filing
10
MEMORANDUM OPINION AND ORDER re: 4 MOTION by First Carolina State Bank to Dismiss Complaint is GRANTED; MOTION by First Carolina State Bank to Transfer Venue is DENIED as moot. Signed by Judge David A. Faber on 9/17/2012. (cc: counsel of record) (mjp)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
BLUEFIELD
LACY WRIGHT, JR., and
JOHN DOES 1-100,
Plaintiffs,
v.
CIVIL ACTION NO.: 1:11-00718
FIRST CAROLINA STATE BANK,
a North Carolina Corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
Before the court is defendant's motion to dismiss or, in the
alternative, motion to transfer venue.
(Doc. # 4).
For reasons
explained more fully below, the defendant’s motion to dismiss is
GRANTED and the motion to transfer venue is DENIED as moot.
I. Factual and Procedural History
Plaintiff, Lacy Wright, Jr. (“Wright”), brought this action
against defendant First Carolina State Bank ("First Carolina" or
"FCSB") on September 26, 2011, in the Circuit Court of McDowell
County, West Virginia.
According to the allegations in the
Complaint, FCSB violated the West Virginia Uniform Securities
Act, the rules and regulations of the Federal Deposit Insurance
Corporation ("FDIC") and the North Carolina Commission of Banks,
and was otherwise negligent in its operation of the FCSB.
Complaint ¶¶ 9-15.
See
According to Wright, the negligence of FCSB
and its alleged violations of law have caused harm to Wright, a
1
stockholder in First Carolina, and others similarly situated.
See id.
Wright seeks general damages in the amount of $75,000,
plus punitive damages for defendant’s conduct.
On October 10, 2011, FCSB removed the case to this court,
invoking the court’s diversity jurisdiction under 28 U.S.C.
§ 1332.
Wright is a citizen of West Virginia and FCSB is a
corporation organized under the laws of North Carolina with its
principal place of business in Rocky Mount, North Carolina.
On November 21, 2011, FCSB filed the instant motion to dismiss
for lack of personal jurisdiction.
In the alternative, defendant
asks the court to transfer venue to the Eastern District of North
Carolina.
In its motion to dismiss, FCSB contends that it does not
possess sufficient contacts with West Virginia to create personal
jurisdiction.
In his Complaint, however, Wright asserts that
FCSB “regularly operates, conducts and transacts business on a
regular basis in multiple states, including the States of
Virginia and West Virginia.”
Complaint ¶ 5.
Furthermore, in his
response to FCSB’s motion, Wright contends that because FCSB sold
stock to him in West Virginia and, by doing so, allegedly
violated West Virginia’s Uniform Securities Act, that personal
jurisdiction exists.
2
II. Standard of Review
Plaintiff bears the ultimate burden of proving personal
jurisdiction by a preponderance of the evidence.
New Wellington
Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th
Cir. 2005).
When “the court addresses the question on the basis
only of motion papers, supporting legal memoranda and the
relevant allegations of a complaint, the burden on the plaintiff
is simply to make a prima facie showing of a sufficient
jurisdictional basis in order to survive the jurisdictional
challenge.”
Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).
“In considering a challenge on such a record, 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.”
Id.
But when affidavits are submitted as to the jurisdictional
question, “[i]n ruling on a motion to dismiss for lack of
personal jurisdiction, the allegations of the complaint, except
insofar as controverted by defendant’s affidavit, must be taken
as true.”
Wolf v. Richmond County Hosp. Auth., 745 F.2d 904, 908
(4th Cir. 1984) (quoting Black v. Acme Markets, Inc., 564 F.2d
681, 683 n.3 (5th Cir. 1977) (emphasis added)).
“Under Federal Rule of Civil Procedure 4(k)(1)(A), a federal
court may exercise personal jurisdiction over a defendant in the
manner provided by state law.”
Carefirst of Md., Inc. v.
3
Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir.
2003).
Therefore, “for a district court to assert personal
jurisdiction over a nonresident defendant, two conditions must be
satisfied: (1) the exercise of jurisdiction must be authorized
under the state's long-arm statute; and (2) the exercise of
jurisdiction must comport with the due process requirements of
the Fourteenth Amendment.”
“Because the West Virginia
Id.
long-arm statute is coextensive with the full reach of due
process, it is unnecessary . . . to go through the normal
two-step formula for determining the existence of personal
jurisdiction.
Rather the statutory inquiry necessarily merges
with the Constitutional inquiry."
In re Celotex Corp., 124 F.3d
619, 627-28 (4th Cir. 1997).
“To satisfy constitutional due process, the defendant must
have sufficient minimum contacts with West Virginia so that
requiring it to defend its interests here would not ‘offend
traditional notions of fair play and substantial justice.’"
Vass v. Volvo Trucks North America, Inc., 304 F. Supp.2d 851, 854
(S.D.W. Va. 2004) (citing International Shoe Co. v. Washington,
326 U.S. 310, 316 (1945)).
“Those minimum contacts necessary to
confer jurisdiction are limited to those activities by which a
person ‘purposely avails itself of the privilege of conducting
activities within the forum state.’”
Denckla, 357 U.S. 235, 253 (1958)).
4
Id. (citing Hanson v.
As the Vass court explained,
This occurs where the contacts "proximately
result from actions by the defendant himself
that create a 'substantial connection' with
the forum state," Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475, 85 L. Ed. 2d
528, 105 S. Ct. 2174 (1985)(emphasis in
original), or where the defendant's efforts
are "purposefully directed" at the state.
Id. at 476.
Id.
As the Supreme Court has noted, courts have “differentiated
between general or all-purpose jurisdiction, and specific or
case-linked jurisdiction.”
Goodyear Dunlop Tires Operations,
S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011).
“To establish
`general jurisdiction’ over a foreign corporation, the plaintiff
must show that the corporation’s activities in the state are
‘continuous and systematic,’ which is a more demanding standard
that is necessary for establishing `specific jurisdiction.’”
Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273, 276 n.3
(4th Cir. 2009).
“If the defendant’s contacts with the State are
also the basis for the suit, those contacts may establish
specific jurisdiction.”
ALS Scan, Inc. v. Digital Service
Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002).
The United States Court of Appeals for the Fourth Circuit
has articulated a three-part test for determining whether
specific jurisdiction exists in a given case.
consider:
5
A court is to
(1)
the extent to which the defendant
purposefully availed itself of the privilege
of conducting activities in the State;
(2)
whether the plaintiffs’ claims arise out of
those activities directed at the State; and
(3)
whether the exercise of personal jurisdiction
would be constitutionally reasonable.
Consulting Eng’rs, 561 F.3d at 278.
In discussing the first
factor, the Fourth Circuit noted that it “articulates the minimum
contacts requirement of constitutional due process that the
defendant purposefully avail himself of the privilege of
conducting business under the laws of the forum state.”
Id.
Factors a court may consider “in seeking to resolve whether a
defendant has engaged in such purposeful availment” include:
(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
6
(8)
Id.
whether the performance of contractual duties
was to occur within the forum.
Only if a plaintiff satisfies the first prong of the test
for specific jurisdiction must a court consider the second and
third prongs.
See id.
III. Analysis
A.
Motion to Dismiss
In support of its motion to dismiss, FCSB offered the
affidavit of William M. Griffith, Jr., the Interim President and
Chief Executive Officer of First Carolina State Bank.
See
Affidavit of William M. Griffith, Jr. (attached as Exhibit 1 to
Defendant’s Motion to Dismiss).
According to Griffith’s
affidavit, which Wright does not contest, Reidsville Community
Bank (“RCB”) is a division of FCSB, a North Carolina corporation
with its principal place of business in Rocky Mount, North
Carolina.
See id. at ¶ 3.
FCSB maintains three branch
locations, all of which are in North Carolina.
See id. at ¶ 4.
On or about January 2008, plaintiff Wright contacted Tim
Webb, the proposed Executive Vice President and Chief Credit
Officer of RCB, by telephone regarding the purchase of RCB stock.
See id. at ¶ 7.
Mr. Webb was at RCB in North Carolina when he
received Wright’s telephone call.
See id.
According to
Griffith, Webb did not initially contact Wright or intentionally
solicit him to purchase RCB stock.
See id. at ¶ 8.
Griffith
stated, however, that RCB would have likely mailed a prospectus
7
to Wright in West Virginia.
See id. at ¶ 9.
On or about January
30, 2008, Wright executed a RCB Subscription Agreement to
purchase 100 shares of RCB stock.
See id. at ¶ 10.
Thereafter, in October 2008, RCB became a division of FCSB
instead of becoming a state bank as it has originally proposed.
See id. at ¶ 11.
On or about October 1, 2008, RCB offered
subscribers who had initially invested in RCB the option to
transfer their investment to FCSB or have any previous investment
in RCB returned to them.
See id. at ¶ 12.
To that end, FCSB
would have mailed a prospectus for FCSB to Wright in West
Virginia, explaining that RCB would become a division of FCSB.
See id. at ¶ 13.
On or about October 23, 2008, Webb sent a fax to Wright
containing the signature page of the FCSB Subscription Agreement.
See id. at ¶ 14.
Wright executed the FCSB Subscription Agreement
on or about October 24, 2008.
See id.
On or about October 29,
2008, Tracy Musick, Proposed Operations Assistant Manager of RCB,
emailed Wright to let him know that FCSB had received his
executed subscription agreement via fax but that the originals
would still need to be returned to FCSB in North Carolina.
id. at ¶ 15.
See
On November 4, 2008, Wright mailed an executed FCSB
Subscription Agreement Signature Page to FCSB in Reidsville,
North Carolina.
See id. at ¶ 16.
8
Thereafter, on December 15,
2008, FCSB issued 100 shares of FCSB common stock to Wright.
See
id. at ¶ 17.
Concerning defendant’s ties with West Virginia, Griffith
testified that no one with RCB or FCSB solicited Wright to
purchase RCB or FCSB stock.
See id. at ¶ 20.
Virginia stockholders other than Wright.
FCSB has no West
See id. at ¶ 21.
FCSB
has no offices or branch locations in West Virginia nor does it
own or lease real property in West Virginia.
See id. at ¶ 22.
FCSB does not have a telephone listing in West Virginia,
advertise in West Virginia, have a West Virginia bank account, or
pay taxes in West Virginia.
See id. at ¶¶ 23, 24.
FCSB does not
contract to supply services or things in West Virginia nor does
it sell its products in West Virginia.
See id. at ¶ 24.
According to Griffith, FCSB does not regularly make loans in West
Virginia or sell its stock to West Virginia residents.
at ¶ 26.
See id.
All of FCSB’s officers, directors, and employees live
in North Carolina and FCSB has never sent its personnel to West
Virginia for any business purpose.
See id. at ¶¶ 27, 28.
Wright
has not filed an affidavit to contradict the substance of Mr.
Griffith’s affidavit nor did he seek limited discovery on the
jurisdictional issue.
To the extent that Wright attempts to establish that this
court has general jurisdiction over FCSB, see Complaint at ¶ 5,
9
that attempt fails.1
Wright has not shown that FCSB’s activities
in West Virginia are “continuous and systematic.”
ALS Scan, Inc.
v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir.
2002) (“To establish general jurisdiction over the defendant, the
defendant’s activities in the State must have been ‘continuous
and systematic,’ a more demanding standard than is necessary for
establishing specific jurisdiction.”).
A single sale of stock to
one person does not provide the sort of contacts necessary to
establish general jurisdiction.
See ESAB Grp., Inc. v.
Centricut, Inc., 126 F.3d 617, 624 (4th Cir. 1997) (holding no
general jurisdiction available for a defendant with twenty-six
customers in forum state which made up less than 1% of its
nationwide sales volume).
Likewise, Wright fails to establish that this court
possesses specific jurisdiction over FCSB because he has not
shown that FCSB has purposefully availed itself of conducting
activities in West Virginia.
The extent of FCSB’s contacts with
Wright consisted of a telephone call from Wright to Webb, two
faxes and an email from FCSB to Wright confirming Wright’s
1
Wright’s assertion that “[u]pon information and belief, .
. . First Carolina Bank [ ] regularly operates, conducts and
transacts business on a regular basis in . . . West Virginia” is
too vague to establish a prima facie case of jurisdiction,
especially in light of Mr. Griffith’s uncontroverted affidavit.
See, e.g., Base Metal Trading, Ltd. v. OJSC “Novokuznetsky
Aluminum Factory”, 283 F.3d 208, 214-15 (4th Cir. 2002) (“Base
Metal simply cannot support jurisdiction in Maryland by making
vague, unsubstantiated claims. . . .”).
10
execution of the signature pages of the Subscription Agreements,
and FCSB’s mailing of two prospectuses to Wright only after
Wright had initiated contact with FCSB.
The quality and nature
of these contacts falls woefully short of demonstrating that FCSB
purposefully availed itself of the privilege of doing business in
West Virginia to an extent sufficient to justify personal
jurisdiction.
Indeed, FCSB does not have offices or employees in
West Virginia, nor does it own property there.
FCSB did not
reach into West Virginia to solicit or initiate business with Mr.
Wright, rather it was Mr. Wright who first reached out to FCSB in
North Carolina.
FCSB has not engaged in significant or long-term
business activities in West Virginia.
FCSB did not make in-
person contact with Mr. Wright in West Virginia regarding the
business relationship.
Furthermore, the record does not show any
contractual agreement by the parties that the law of West
Virginia would govern any disputes nor was the performance of
contractual duties to occur within West Virginia.
In summary,
FCSB’s contacts with West Virginia “were sufficiently attenuated
that it would be a manifest injustice to hale it into [West]
Virginia court.”
Consulting Eng’rs Corp. v. Geometric Ltd., 561
F.3d 273, 281 (4th Cir. 2009) (four telephone calls and twentyeight emails not sufficient contacts to establish court’s
exercise of personal jurisdiction over nonresident defendant).
11
IV. Conclusion
Based on the foregoing, the court GRANTS defendant’s motion
to dismiss and DENIES the motion to transfer venue to the Eastern
District of North Carolina as moot.
The Clerk is directed to forward a copy of this Memorandum
Opinion and Order to all counsel of record.
It is SO ORDERED this 17th day of September, 2012.
ENTER:
David A. Faber
Senior United States District Judge
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?