U.S. Chem. Storage, LLC v. Berto Constr., Inc.
253 N.C. App. 378
| N.C. Ct. App. | 2017Background
- Berto Construction, a New Jersey corporation, contracted with the Port Authority and, pursuant to that Contract, entered a Subcontract with US Chemical Storage, a North Carolina LLC, for prefabricated hazmat/supply buildings.
- The Port Authority Contract contained a clause submitting disputes to the courts of New York and New Jersey; the Subcontract incorporated the Contractor's terms by reference and stated it was governed by New Jersey law.
- US Chemical sued Berto in North Carolina state court for breach of the Subcontract for unpaid balance; Berto moved to dismiss under Rule 12(b)(2) arguing lack of personal jurisdiction and enforcement of the forum selection clause.
- The trial court denied dismissal, concluding the incorporated forum clause was permissive (not exclusive) and that North Carolina’s long‑arm statute reached Berto because buildings were designed/constructed in and shipped from North Carolina.
- On interlocutory appeal the NC Court of Appeals held (1) the forum selection clause, as interpreted under New Jersey law, was valid, mandatory, and incorporated into the Subcontract; and (2) Berto lacked sufficient minimum contacts with North Carolina to support personal jurisdiction. The trial court’s denial of the motion to dismiss was vacated and the case remanded.
Issues
| Issue | Plaintiff's Argument (US Chemical) | Defendant's Argument (Berto) | Held |
|---|---|---|---|
| Enforceability of forum‑selection clause | Subcontract does not make the NY/NJ forum exclusive; suit in NC is permitted. | The Contract's mandatory NY/NJ forum clause is incorporated by reference into the Subcontract and bars NC suit. | The clause, under New Jersey law, is valid, mandatory, incorporated by reference, and precludes NC litigation. |
| Personal jurisdiction / minimum contacts | Berto purposefully availed itself of NC by contracting with a NC manufacturer whose buildings were designed/constructed and shipped from NC. | Berto had only a single contract with a NC company and no evidence it knew performance would occur in NC; thus no minimum contacts. | Berto lacked sufficient contacts with NC to reasonably anticipate being haled into NC court; long‑arm jurisdiction not established. |
Key Cases Cited
- Tom Togs, Inc. v. Ben Elias Indus. Corp., 318 N.C. 361 (N.C. 1986) (single contract can create minimum contacts where defendant knew performance would occur in NC)
- Bundy v. Commercial Credit Co., 200 N.C. 511 (N.C. 1931) (place of contract determined by where the last essential act was performed)
- Szymczyk v. Signs Now Corp., 168 N.C. App. 182 (N.C. Ct. App. 2005) (forum clause analyses rely on where contract was formed; last signature controlling)
- Hendry v. Hendry, 339 N.J. Super. 326 (N.J. Super. Ct. App. Div. 2001) (language submitting to a state’s courts constitutes an enforceable forum‑selection clause)
- Sony Ericsson Mobile Commc'ns USA, Inc. v. Agere Sys., Inc., 195 N.C. App. 577 (N.C. Ct. App. 2009) (interpretation of forum selection clause reviewed de novo)
- Cox v. Dine‑A‑Mate, Inc., 129 N.C. App. 773 (N.C. Ct. App. 1998) (validity of a forum selection clause is a substantial right permitting interlocutory appeal)
- Replacements, Ltd. v. MidweSterling, 133 N.C. App. 139 (N.C. Ct. App. 1999) (findings of fact on personal jurisdiction reviewed for competent evidence)