Global Textile All., Inc. v. Tdi Worldwide, LLC

Global Textile All., Inc. v. TDI Worldwide, LLC, 2018 NCBC 116.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF GUILFORD 17 CVS 7304

GLOBAL TEXTILE ALLIANCE,
INC.,

Plaintiff,

v.

TDI WORLDWIDE, LLC, DOLVEN
ENTERPRISES, INC., TIMOTHY
DOLAN, individually and in his
capacity as an officer, shareholder ORDER AND OPINION ON
and director of Dolven Enterprises, DEFENDANTS GFY INDUSTRIES
Inc. and an officer and owner of TDI LIMITED, GFY, LIMITADA de
Worldwide, LLC; JAMES DOLAN, CAPITAL VARIABLE, GFY
individually and in his capacity as an
officer, shareholder and director of COOPERATIVE, U.A. and GFY SH’S
Dolven Enterprises, Inc., STEVEN 12(b)(2) MOTION TO DISMISS
GRAVEN, individually and in his SECOND AMENDED COMPLAINT
capacity as an officer, shareholder AND PLAINTIFF’S MOTIONS TO
and director of Dolven Enterprises, STRIKE
Inc., RYAN GRAVEN, individually
and in his capacity as an officer,
shareholder and director of Dolven
Enterprises, Inc., GARRETT
GRAVEN, individually, GFY
INDUSTRIES LIMITED, GFY,
LIMITADA de CAPITAL VARIABLE,
GFY COOPERATIVE, U.A., and 上海
冠沣源贸易有限公司 a/k/a GFY SH,

Defendants.

THIS MATTER comes before the Court on Defendants Ryan Graven, Dolven

Enterprises, Inc., GFY Industries Limited, GFY, Limitada de Capital Variable, GFY

Cooperative, U.A., and GFY SH’s Motion to Dismiss Second Amended Complaint.

(Defs.’ Mot. Dismiss Sec. Am. Compl., ECF No. 288.) The Motion to Dismiss Second

Amended Complaint seeks dismissal of Defendants on two distinct grounds: (1) under

North Carolina Rule of Civil Procedure 12(b)(2) (hereinafter “Rule”) based on lack of

personal jurisdiction over GFY Industries Limited, GFY, Limitada de Capital
Variable, GFY Cooperative, U.A., and GFY SH (collectively, “GFY Defendants”), and

(2) under Rule 12(b)(6) for failure to state claims as to all Defendants.1 Defendants

sought, and the Court granted, leave for the GFY Defendants to separately file a brief

in support of their 12(b)(2) motion to dismiss for lack of personal jurisdiction (“GFY

Defendants’ Motion”), and for all Defendants to file a single, consolidated brief in

support of their 12(b)(6) motions to dismiss. (Order, ECF No. 163.) Accordingly, this

Order and Opinion addresses only the GFY Defendants’ Motion. The Defendants’

motion to dismiss under Rule 12(b)(6) will be addressed in a separate order of this

Court.

THE COURT, having considered the Motion, the briefs in support of and in

opposition to the Motion, the arguments of counsel at the hearing, and other

appropriate matters of record, concludes that the Motion should be GRANTED, in

part, and DENIED, in part in the manner and for the reasons set forth below.

Hagan Barrett & Langley PLLC, by J. Alexander S. Barrett and Kurt A.
Seeber for Plaintiff Global Textile Alliance, Inc.

K&L Gates LLP, by A. Lee Hogewood III, John R. Gardner, and Matthew
T. Houston for Defendants Dolven Enterprises, Inc., Ryan Graven, GFY
Industries Limited, GFY Limitada de Capital Variable, GFY
Cooperative, U.A., and GFY Shanghai.

Morningstar Law Group, by Shannon R. Joseph and Jeffrey L. Roether
for Defendant Garrett Graven.

1 In connection with the GFY Defendants’ Motion, Plaintiff filed two separate motions to

strike various documents filed by GFY Defendants in support of their motion to dismiss.
(“Motions to Strike”; ECF Nos. 304, 339.) GFY Defendants filed briefs in opposition to the
Motions to Strike, (ECF Nos. 334, 349), and Plaintiff filed replies. (ECF Nos. 339, 350). The
Court has thoroughly considered the Motions to Strike, and concludes, in its discretion, that
they should be DENIED.
Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Eric M.
David, Brian C. Fork, and Shepard D. O’Connell for Defendant James
Dolan.

James, McElroy & Diehl, P.A., by Fred B. Monroe and Jennifer M. Houti
for Defendants TDI Worldwide, LLC and Timothy Dolan.

Ellis & Winters LLP, by Jonathan A. Berkelhammer, Steven A. Scoggan,
and Scottie Forbes Lee for Defendant Steven Graven.

McGuire, Judge.

1. In considering a 12(b)(2) Motion, the Court makes its findings of fact

based on a “review of [Plaintiff’s Second Amended Complaint (“SAC”)2], the parties’

exhibits, the submitted depositions and affidavits, other appropriate evidence of

record, and the arguments of counsel at the hearings on the 12(b)(2) Motion . . . .”

AYM Techs., LLC v. Rodgers, 2018 NCBC LEXIS 14, at *7 (N.C. Super. Ct. Feb. 9,

2018). The Court accepts Plaintiff’s allegations as true, to the extent they are

uncontested by the affidavits and other evidence presented by Defendants. See

Herrera v. Charlotte Sch. of Law, LLC, 2018 NCBC LEXIS 15, at *10 (N.C. Super. Ct.

Feb. 14, 2018).

I. FINDINGS OF FACT AND PROCEDURAL BACKGROUND

2. Plaintiff Global Textile Alliance, Inc. (“Plaintiff”) is a North Carolina

corporation with its principal place of business in Rockingham County, North

Carolina. Plaintiff is in the business of providing fabrics, mattress ticking, covers,

2 (Sec. Am. Compl., ECF No. 261.)
and other textiles to the bedding, upholstery, and home furnishings industries. (Sec.

Am. Compl., ECF No. 261, at ¶ 1.)

3. Plaintiff was founded in 2001 by Luc Tack (“Tack”), a Belgian

entrepreneur, and Defendants Timothy Dolan (“Timothy”) and Steven Graven

(“Steven”) “for the purpose of providing fabric sourcing alternatives to furniture and

bedding manufacturers in the United States.” (Id. at ¶¶ 20–21.) Tack provided the

funding to start Plaintiff, and Timothy incorporated Plaintiff and transferred all of

its shares to Tack in the fall of 2001. (Id. at ¶ 21.) Since that time, Tack has been

the sole shareholder of Plaintiff. (Id.) Until April 2016, Timothy served as Plaintiff’s

CEO and as a director, and Steven served as Plaintiff’s Executive Vice President and

as a director. (Id. at ¶¶ 4, 6.)

4. Defendant Ryan Graven (“Ryan”) is a citizen and resident of North

Carolina. (R. Graven Aff. ISO MTD, ECF No. 289.1, at ¶ 1.) Ryan is the son of Steven

and a former employee of Plaintiff. (ECF No. 261, at ¶ 7.) Ryan served as the legal

representative and head operating manager of Plaintiff’s operations in China. (Id.)

Ryan is also the founder, or one of the founders, of each of GFY Defendants. (ECF

No. 289.1, at ¶ 3.)

5. Defendant Dolven Enterprises, Inc. (“Dolven”) is a North Carolina

corporation with its principal place of business in Raleigh, North Carolina. (ECF No.

261, at ¶ 3; ECF No. 289.1, at ¶¶ 22–23.) Dolven is owned in equal twenty-five

percent shares by Timothy, Steven, Ryan, and James Dolan (“James”). (ECF No. 261,

at ¶ 3.) Ryan is the President and CEO of Dolven. (Id. at ¶ 7; ECF No. 289.1, at ¶ 2.)
Dolven is engaged in the business of sourcing fabrics, cutting and sewing fabrics, and

providing other services in the bedding and fabric industries in direct competition

with Plaintiff. (ECF No. 261, at ¶ 3.)

6. Defendant GFY Industries Limited (“GFY”) is a Chinese company and

has its principal place of business in Hong Kong, China. (Id. at ¶ 9; ECF No. 289.1,

at ¶ 13.) Timothy, Steven, Ryan, and James founded GFY in 2009. (ECF No. 261, at

¶ 48.) Ryan serves as the director of GFY. (ECF No. 289.1, at ¶ 9.) GFY provides

Plaintiff’s customers with “a resource for cut-and-sew operations and supply chain

management in China.” (Id. at ¶ 14.) Plaintiff alleges that GFY is “managed and

controlled by Dolven,” (ECF No. 261, at ¶ 9), but GFY Defendants have produced

evidence that GFY’s day-to-day operations are managed by individual’s residing in

China. (ECF 289.1, at ¶¶ 10–11.) GFY Defendants also produced evidence that GFY

does not purchase products in, deliver products to, provide services in, advertise in,

pay taxes in, or otherwise have tangible assets in, North Carolina. (Id. at ¶¶ 15–21.)

Plaintiff, however, claims GFY engaged in purchase and sale transactions with

Plaintiff in North Carolina. (Kim Thompson Aff.; ECF No. 235.1. at ¶¶ 5–8.)

7. Defendant GFY Cooperative, U.A. (“GFY Coop”) is a holding company

that was formed in the Netherlands. (ECF No. 261, at ¶ 11; ECF No. 289.1, at ¶ 7.)

Documents GFY Coop is required to file in the Netherlands list the company’s

principal place of business as 1317 Transport Drive, Raleigh, NC, 27603. (D. De

Waard Aff., ECF No. 235.3, at ¶ 8.) Dolven is the majority shareholder in GFY Coop,

and non-party R33183G, LLC is the minority shareholder. (ECF No. 289.1, at ¶¶ 5–
6.) As a holding company, GFY Coop has no employees, no direct operating functions,

and no clients or customers. (Id. at ¶¶ 24–28.) GFY Coop maintains a bank account

in the United States, but has no tangible assets in North Carolina and does not pay

taxes in North Carolina. (Id. at ¶¶ 26, 30.) GFY Coop is the sole shareholder of GFY.

(Id. at ¶ 8.) Plaintiff alleges that GFY Coop is managed and controlled by Dolven.

(ECF No. 261, at ¶ 11.)

8. Defendant GFY Limitada de Capital Variable (“GFY LCV”) is an El

Salvadoran company with its principal place of business in El Salvador. (Id. at ¶ 10;

ECF No. 289.1, at ¶¶ 32, 38.) GFY LCV is owned 99.8% by GFY Coop and .02% by

GFY. (ECF No 289.1, at ¶ 31.) GFY LCV has 125 employees, all of whom are based

in El Salvador. (Id. at ¶ 33.) Although Plaintiff alleges that GFY LCV is managed

and controlled by Dolven, (ECF No. 261, at ¶ 10), Defendants have presented evidence

that GFY LCV has a general manager and other managers in El Salvador who are

responsible for its day-to-day operations. (ECF No. 289.1, at ¶¶ 34–36.) GFY LCV

has produced evidence that it does not have facilities, advertise, or pay taxes, in North

Carolina. (Id. at ¶¶ 37–40.) Plaintiff claims GFY LCV has engaged in purchase and

sale transactions with Plaintiff in North Carolina, (ECF No. 235.1. at ¶¶ 5–8), but

GFY Defendants dispute this claim. (ECF No. 289.1, at ¶ 37.)

9. Defendant GFY SH (“GFY Shanghai”) is a Chinese Company registered

and located in Shanghai, China and is 100% owned by GFY. (ECF No. 289.1, at ¶

42.) GFY Shanghai has 15 employees, all based in China. (Id. at ¶ 48.) Plaintiff

alleges that GFY is “controlled and managed by Dolven,” (ECF No. 261, at ¶ 12), GFY
Defendants produced evidence that the day-to-day operations of GFY Shanghai are

managed from China by a General Manager and other employees. (ECF No. 289.1,

at ¶¶ 44–45.) GFY Shanghai does not have tangible assets or pay taxes in North

Carolina. (Id. at ¶¶ 47–53.)

10. Plaintiff uses third-party vendors to provide certain products and

services integral to its manufacturing of its products. Plaintiff contracts with third-

party fabric mills to manufacture some of its fabrics. Plaintiff also contracts with

“cut-and-sew” operations to further process the fabric that Plaintiff manufactures

into final products for its customers. Plaintiff uses an “extremely selective” process

to identify qualified third parties, a process that requires significant amounts of time

and money. (ECF No. 261, at ¶ 29.) The third-party fabric mills and cut-and-sew

operations are located primarily in China.

11. In or around 2005, Plaintiff hired Ryan to set up an office in China and

to oversee all of Plaintiff’s business in Asia. (Id. at ¶¶ 34–35.) Plaintiff initially did

its sourcing in China through a Wholly Owned Foreign Enterprise (“WOFE”) named

Paradise, which was and is owned by Luc Tack. (Id. at ¶ 36.) In 2010, Plaintiff

created Guanteng (“GTA Asia”), another WOFE, to conduct business on its behalf in

Asia. (Id. at ¶ 36.) Ryan was named Director of GTA Asia. (Id.) Through GTA Asia,

Plaintiff invested “significant amounts of time and money” to identify, select, and

develop relationships with Chinese vendors capable of providing high-quality,

reliable products and services for Plaintiff. (Id. at ¶¶ 40–41.)
12. Ryan’s primary job functions for Plaintiff were “to locate factories in

China that could produce fabric for [Plaintiff], to manage the quality of the fabric

produced for [Plaintiff] in those factories, to ensure that fabric produced at those

factories for [Plaintiff] was delivered properly, and to provide general customer

service for [Plaintiff’s] operations in China.” (Graven Prel. Inj. Aff., ECF No. 61.1, at

¶ 3.) Ryan worked on Plaintiff’s behalf in Asia until 2012, when Ryan’s brother,

Garrett Graven (“Garrett”), replaced Ryan as Director of GTA Asia. (ECF No. 261,

at ¶ 38.) Ryan, however, maintained employment with Plaintiff and continued

overseeing various individuals who filled the role of legal representative and Director

of GTA Asia. (Id.)

13. Through their positions with Plaintiff, Timothy, Ryan, Garrett and

others gained extensive and detailed knowledge about all aspects of Plaintiff’s Asia

operations and about the capabilities of Plaintiff’s vendors. (Id. at ¶ 44.) Plaintiff

alleges that they leveraged this knowledge to form the GFY Defendants to compete

with and usurp business opportunities from Plaintiff. (Id. at ¶¶ 125–32.)

14. On or about May 4, 2009, Timothy, Steven, Ryan, and James founded

GFY using Plaintiff’s offices, employees, capital, and other assets. (Id. at ¶ 48.) Ryan

stated that GFY was founded to “manage the sourcing, quality and servicing of [cut-

and-sew] products.” (Id. at ¶ 50.) Steven stated that the creation of GFY was

facilitated by “experiences [Ryan] gained in China” and that GFY was created for the

purpose of having one company “manage cut-and sew facilities, operations, logistics,

quality control, and product in-flow and out flow.” (Id.)
15. Plaintiff alleges that GFY “went into direct competition” with Plaintiff.

(Id. at ¶ 51.) GFY purchased fabric from Plaintiff, which GFY would then send to

third-party cut-and-sew vendors to make products for Plaintiff’s customers. (Id. at

¶ 65.) Plaintiff alleges that “[t]here was no reason that [Plaintiff] could not have

directly sourced its fabrics to the third-party cut and sew operators, as it had done

for many years.” (Id.) Timothy, Steven, Ryan and James did not disclose the creation

of, or their ownership interests in, GFY to Tack. (Id. at ¶ 68.)

16. In August of 2013, Timothy, Steven, Ryan, and James created Dolven,

each owning a twenty-five percent interest in Dolven. (Id. at ¶ 77.) Dolven “is

engaged in sourcing fabrics, cutting and sewing of fabrics, and providing other

services in the bedding and fabric industries.” (Id. at ¶ 3.) Dolven owns, manages,

and controls GFY. (Id. at ¶ 9.) Plaintiff alleges that Dolven was created using

Plaintiff’s resources to divert business from Plaintiff to Dolven. (Id. at ¶ 77.)

17. Plaintiff further alleges that Timothy, Steven, Ryan, and James created

GFY LCV, GFY Shanghai, and GFY Coop in early 2014 to facilitate the diversion of

corporate opportunities by Dolven away from GTA. (Id. at ¶ 82.)

18. According to Plaintiff, Timothy, Steven, Ryan, and Garrett used their

employment with Plaintiff and Plaintiff’s resources to benefit the business interests

of Dolven and the GFY Defendants without disclosing to Plaintiff their ownership

interests in Dolven or the GFY Defendants. (Id. at ¶ 84.) For instance, Plaintiff

alleges that Timothy, Steven, Ryan, and Garett gave preferential treatment to Dolven

and the GFY Defendants in transactions with Plaintiff and usurped opportunities
belonging to Plaintiff in favor of Dolven and the GFY Defendants. (Id. at ¶¶ 85–99.)

As a result of this alleged misconduct, Plaintiff claims it has suffered damage to its

relationships with its customers and suppliers and has lost business opportunities,

which rightfully belonged to it. (Id. at ¶¶ 98, 103.)

19. Plaintiff initiated this lawsuit by filing a Verified Complaint on August

15, 2017. (ECF No. 4.)

20. On September 26, 2017, GFY Defendants made a special limited

appearance before the Court “for the purpose of filing a motion to dismiss or otherwise

contesting the Court’s jurisdiction over [GFY Defendants]” and did “not consent or

submit to the jurisdiction of this Court.” (Notice of Limited Special Appearance, ECF

No. 43.)

21. On April 11, 2018, Plaintiff filed the SAC. In the SAC, Plaintiff makes

the following claims against GFY Defendants: actual and constructive fraud (Third

Claim for Relief); common law unfair competition/business conversion (Sixth Claim

for Relief); unfair and deceptive trade practices in violation of North Carolina’s Unfair

and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 (“UDTPA”) (hereinafter,

the North Carolina General Statutes will be referred to as “G.S.”) (Seventh Claim for

Relief); constructive trust (Tenth Claim for Relief); fraudulent transfer under G.S. §

39-23.1, et seq. (Eleventh Claim for Relief); and a motion for preliminary and

permanent injunction (Twelfth Claim for Relief).

22. On May 14, 2018, Defendants filed the GFY Defendants’ Motion and a

brief in support of the Motion. (Br. Supp. GFY Defs.’ Mot. Dismiss, ECF No. 289.)
On June 8, 2018, Plaintiff filed its brief in opposition to the GFY Defendants’ Motion.

(Pl.’s Br. Opp. 12(b)(2) Mot. Dismiss, ECF No. 318.) Defendants filed their reply brief

in support of the GFY Defendants’ Motion on June 21, 2018. (ECF No. 329.) The

Court held a hearing on the GFY Defendants’ Motion, and it is now ripe for resolution.

I. ANALYSIS

A. Standard of Review

23. “[T]he plaintiff bears the burden of proving, by a preponderance of the

evidence, grounds for exercising personal jurisdiction over a defendant. . . . [U]pon a

defendant’s motion to dismiss for lack of personal jurisdiction, the plaintiff bears the

burden of making out a prima facie case that jurisdiction exists.” Bauer v. Douglas

Aquatics, Inc., 207 N.C. App. 65, 68, 698 S.E.2d 757, 761 (2010) (internal citation

omitted). When a defendant supports his motion to dismiss for lack of personal

jurisdiction with affidavits, the plaintiff cannot rest on the unverified allegations in

the complaint; rather, the plaintiff must respond by affidavit or otherwise, setting

forth specific facts showing that the court has personal jurisdiction. Id. at 68−69, 698

S.E.2d at 761; Banc of Am. Sec. LLC v. Evergreen Int’l Aviation, Inc., 169 N.C. App.

690, 693, 611 S.E.2d 179, 182 (2005). “An unverified complaint is not an affidavit or

other evidence.” Hill v. Hill, 11 N.C. App. 1, 10, 180 S.E.2d 424, 430 (1971). When a

defendant supports his motion with affidavits and the plaintiff does not offer opposing

evidence, the court considers the uncontroverted allegations in the complaint and all

facts in the defendant’s affidavits in determining whether the court has personal

jurisdiction. Banc of Am. Sec. LLC, 169 N.C. App. at 693−94, 611 S.E.2d at 182−83;
see also Weisman v. Blue Mt. Organics Distrib., 2014 NCBC LEXIS 41, at *2 (N.C.

Super. Ct. Sept. 5, 2014) (noting that “allegations in a complaint uncontroverted by

an affidavit are still taken as true”). But, where the parties submit conflicting

affidavits, the Court “must determine the weight and sufficiency of the evidence

[presented in the affidavits] much as a juror.” Banc of Am. Sec. LLC, 169 N.C. App.

at 694, 611 S.E.2d at 183 (citations and quotations omitted).

24. In North Carolina, a court has jurisdiction over a nonresident defendant

if (i) statutory authority for the exercise of jurisdiction under the State’s long-arm

statute, G.S. § 1-75.4, exists and (ii) the nonresident defendant has sufficient contacts

with the State “such that the exercise of jurisdiction does not violate the federal due

process clause.” Bruggeman v. Meditrust Acquisition Co., 138 N.C. App. 612, 614–15,

532 S.E.2d 215, 217 (2000). North Carolina’s long-arm statute allows courts to assert

personal jurisdiction to “the full extent permitted by the Due Process Clause of the

United States Constitution.” Cambridge Homes of N.C., L.P. v. Hyundai Constr., Inc.,

194 N.C. App. 407, 412, 670 S.E.2d 290, 295 (2008) (citations and quotations omitted).

Thus, the Court need not always consider the long-arm statute in its analysis because

“the question of statutory authority collapses into one inquiry—whether defendant

has the minimum contacts necessary to meet the requirements of due process.” Id.

(citations and quotations omitted).

25. For a court to exercise personal jurisdiction over a non-resident

defendant, due process requires that the defendant “have certain minimum contacts

with [the forum state] such that the maintenance of the suit does not offend
traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington,

326 U.S. 310, 316 (1945) (internal quotations omitted); Skinner v. Preferred Credit,

361 N.C. 114, 122, 638 S.E.2d 203, 210 (2006). The defendant must purposefully avail

himself of the privilege of conducting activities in the forum state, thereby invoking

the benefits and protections of the forum state’s laws. Tom Togs, Inc. v. Ben Elias

Indus. Corp., 318 N.C. 361, 365, 348 S.E.2d 782, 786 (1986). In determining whether

a defendant has sufficient minimum contacts, North Carolina courts 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.” Banc of Am. Sec. LLC, 169 N.C. App. at 696,

611 S.E.2d at 184.

26. The “relationship between the defendant and the forum must be ‘such

that he should reasonably anticipate being haled into court there.’” Tom Togs, Inc.,

at 365−66, 348 S.E.2d at 786 (quoting World-Wide Volkswagen Corp. v. Woodson, 444

U.S. 286, 297 (1980)). Unilateral activity within the forum state by others who have

some relationship with a non-resident defendant is insufficient. Banc of Am. Sec.

LLC, 169 N.C. App. at 695, 611 S.E.2d at 184. “Each defendant’s contacts with the

forum State must be assessed individually.” Brown v. Refuel Am., Inc., 186 N.C. App.

631, 638, 652 S.E.2d 389, 394 (quoting Calder v. Jones, 465 U.S. 783, 790 (1984)).

27. There are two bases for finding sufficient minimum contacts: (1) general

jurisdiction and (2) specific jurisdiction. General jurisdiction may be asserted over a

defendant “even if the cause of action is unrelated to [the] defendant’s activities in
the forum as long as there are sufficient ‘continuous and systematic’ contacts between

[the] defendant and the forum state.” Replacements, Ltd. v. Midwesterling, 133 N.C.

App. 139, 145, 515 S.E.2d 46, 51 (1999). The contacts should “render [the defendant]

essentially at home in the forum state.” Worley v. Moore, 2017 NCBC LEXIS 15, at

*54 (N.C. Super. Ct. Feb. 28, 2017) (quoting Daimler AG v. Bauman, 571 U.S. 117,

127 (2014)). A court should evaluate all contacts with the forum that occurred during

the relevant time period, based on the totality of the circumstances and the facts of

each case. See Sea-Roy Corp. v. Parts R Parts, Inc., 1:94CV00059, 1995 U.S. Dist.

LEXIS 21859, at *34–35 (M.D.N.C. Aug. 16, 1995); Stetser v. TAP Pharm. Prods., 162

N.C. App. 518, 522–23, 591 S.E.2d 572, 576 (2004).

28. By contrast, “[s]pecific jurisdiction exists when the controversy arises

out of the defendant’s contacts with the forum state.” Lab. Corp. of Am. Holdings v.

Caccuro, 212 N.C. App. 564, 569, 712 S.E.2d 696, 701 (2011) (citations and quotations

omitted). The contacts must not be “passive” or based solely on “random, fortuitous,

or unilateral activity of another party or a third person.” Cambridge Homes of N.C.

L.P., 194 N.C. App. at 413, 670 S.E.2d at 296. Instead, the contacts should form “an

affiliation between the forum and the underlying controversy, principally, [an]

activity or an occurrence that takes place in the forum State and is therefore subject

to the State’s regulation.” Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct.

1773, 1780 (2017) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564

U.S. 915, 919 (2011)) (quotations omitted). The defendant must also have “‘fair

warning’ that he may be sued in a state for injuries arising from activities that he
‘purposefully directed’ toward that state’s residents.” Tom Togs, Inc., 318 N.C. at

366, 348 S.E.2d at 786.

29. In support of the Motion, GFY Defendants argue that they are foreign

entities with their principal places of business outside of the United States that lack

sufficient minimum contacts with North Carolina to allow this Court to exercise

jurisdiction over them. (ECF No. 289, at p. 6.) In response, Plaintiff makes several

arguments. Unfortunately, Plaintiff’s briefing and oral arguments in opposition to

the Motion have left the Court somewhat confused as to the legal basis for some of

Plaintiff’s positions. Plaintiff’s overarching contention seems to be that because Ryan

and Dolven are North Carolina residents, have ownership interests in or other

connections to the GFY Defendants, and allegedly control the GFY Defendants, the

GFY Defendants should all be subject to jurisdiction in North Carolina. The Court

and GFY Defendants construe this argument as based on a type of “veil piercing”

theory (ECF No. 329, p. 1); that Ryan and Dolven exert such control over the GFY

Defendants that they have no separate existence of their own. However, at the

hearing, Plaintiff’s counsel denied that Plaintiff was making a veil piercing

argument, but was unable to articulate to the Court’s understanding the actual basis

of their argument. Nevertheless, the Court will address what it interprets as

Plaintiff’s arguments for personal jurisdiction over the GFY Defendants.

30. In construing Plaintiff’s briefing and oral argument, the Court has

identified the following as the contentions presented by Plaintiff: (1) that a filing

made by Dolven in this case constituted a general appearance by GFY and GFY LCV
and waived their rights to challenge personal jurisdiction (ECF No. 318, at pp. 2–4);

(2) that corporate documents filed by GFY Coop in the Netherlands and the United

States establish that GFY Coop’s principal place of business is in North Carolina (Id.

at pp. 8, 11); (3) that alleged purchase and sales transactions between GFY

Defendants and Plaintiff provide the Court with jurisdiction over GFY Defendants

(Id. at pp. 18–20); and (4) that Ryan and Dolven’s management and control of GFY

Defendants from North Carolina gives rise to jurisdiction over GFY Defendants. (Id.

passim.) The Court will address each argument in turn.

B. GFY Defendants Did Not Waive Their Rights to Contest Personal
Jurisdiction.

31. Plaintiff first argues that certain allegations made by Dolven in

counterclaims that Dolven filed in this lawsuit constitute a general appearance by

GFY and GFY LCV and a waiver of their rights to contest personal jurisdiction. (ECF

No. 318, at pp. 2–3.) Plaintiff cites no authority in support of this contention. The

Court disagrees with Plaintiff’s argument.

32. “A general appearance is one whereby the defendant submits his person

to the jurisdiction of the court by invoking the judgment of the court in any manner

on any question other than that of the jurisdiction of the court over his person.”

Judkins v. Judkins, 113 N.C. App. 734, 737, 441 S.E.2d 139, 140 (1994) (citations and

quotations omitted). GFY and GFY LCV have made only limited special appearances

in this matter for the purpose of contesting personal jurisdiction, and have not

invoked this Court’s jurisdiction. Contrary to Plaintiff’s argument, allegations in

Dolven’s pleadings filed with this Court cannot be used as admissions against co-
defendants GFY nor GFY LCV. “Admissions in the answer of one defendant are not

competent evidence against a codefendant” in deciding whether personal jurisdiction

exists. Cambridge Homes of N.C. L.P., 194 N.C. App. at 418, 670 S.E.2d at 299; see

also Barclays American v. Haywood, 65 N.C. App. 387, 389, 308 S.E.2d 921, 923

(1983) (stating that “[f]acts admitted by one defendant are not binding on a co-

defendant”). Therefore, admissions made by Dolven in its answer and counterclaims

cannot constitute a general appearance and waiver of GFY’s and GFY LCV’s rights

to assert lack of personal jurisdiction. The Court concludes that no waiver occurred

and that GFY and GFY LCV have not voluntarily submitted to the Court’s

jurisdiction.

C. The Evidence Before the Court Establishes that GFY Coop’s Principal
Place of Business is in Raleigh, North Carolina.

33. The Court next interprets Plaintiff’s briefing as arguing that GFY Coop’s

principal place of business is in North Carolina.3 (ECF No. 318, at pp. 7–10.) Plaintiff

contends that corporate filings made by GFY Coop list its principal place of business

as 1317 Transport Drive, Raleigh, North Carolina. (ECF No. 235.3, at 4–8; Corporate

Documents, ECF No. 305.3, at pp. 1–10.). GFY Coop, however, claims that its

principal place of business is in the Netherlands. (ECF No. 289.1, at ¶ 27.)

3 The Court does not read Plaintiff’s briefing or oral arguments as challenging Defendants’

averments that GFY, GFY LCV, or GFY Shanghai are foreign entities with their principal
places of business outside of the United States. In fact, Plaintiff admits in its SAC that GFY
and GFY LCV are foreign entities that have their principal places of business in Hong Kong
and El Salvador, respectively. (ECF No. 261, at ¶¶ 9, 10.) Plaintiff also recognizes that GFY
Shanghai is a Chinese company with operations in China and does not otherwise challenge
that its principal place of business is in China. (Id. at ¶ 11; see generally ECF No. 318.)
34. For “a corporation, the place of incorporation and principal place of

business are paradig[m] . . . bases for general jurisdiction.” Daimler, 571 U.S. at 137.

The principal place of business is the corporation’s nerve center, i.e. “the place where

a corporation’s officers direct, control, and coordinate the corporation’s activities.”

Hertz Corp. v. Friend, 559 U.S. 77, 92–93, 130 S. Ct. 1181, 1192, 175 L. Ed. 2d. 1029,

1041 (2010). In determining the location of a defendant’s principal place of business,

courts are directed to ignore jurisdictional manipulation and to focus on “the place of

actual direction, control, and coordination.” Id. at 97.

35. The evidence before the Court demonstrates that GFY Coop made a

filing with the Chamber of Commerce in the Netherlands that “indicates GFY Coop’s

principal place of business is . . . [in] Raleigh, North Carolina” and that “[Dolven] is

a director of GFY Coop.” (ECF No. 235.3, at ¶¶ 8, 10.) The filing states that Dolven

and GFY Coop share the same address. (Id.) GFY Coop also has filed documents

with the United States Internal Revenue Service that list the same Raleigh, North

Carolina address as GFY Coop’s mailing address and list Ryan as director of GFY

Coop. (ECF No. 305.3, at pp. 1–2.) Furthermore, other corporate tax documents

prepared by GFY Coop’s accountants in the Netherlands were sent “to the Board of

Directors of [GFY Coop]” and listed the Transport Drive address in Raleigh, North

Carolina as the address for GFY Coop’s Board of Directors. (Id. at p. 6.) The only

evidence GFY Defendants have presented to the Court in support of its position that

GFY Coop’s principal place of business is in the Netherlands is the affidavit of Ryan

stating as much.
36. Based on the weight of the evidence currently before the Court, the

Court finds that GFY Coop’s principal place of business is in North Carolina and

concludes that this Court may exercise general jurisdiction over GFY Coop. Although

Ryan submitted an affidavit on behalf of GFY Coop stating that GFY Coop’s principal

place of business is in the Netherlands, GFY Coop has not provided any other

evidence in support of that position. On the other hand, GFY Coop’s own official

filings list Raleigh, North Carolina as its principal place of business and mailing

address. This is significant because GFY Coop is a holding company with no

employees, management or otherwise, in the Netherlands and there is no evidence

GFY Coop has any offices in the Netherlands. Instead, the evidence indicates that

Dolven and Ryan are directors of GFY Coop and that GFY Coop is directed/managed

from Dolven’s office in North Carolina. The Court concludes that GFY Coop’s

principal place of business is in North Carolina and GFY Coop is subject to general

jurisdiction in North Carolina.

37. Therefore, this Court has personal jurisdiction over GFY Coop and

concludes that GFY Defendants’ motion to dismiss the claims against GFY Coop for

lack of personal jurisdiction should be DENIED.

D. GFY Defendants’ Purchases from and Sales to Plaintiff in North
Carolina

38. It is uncontroverted that GFY, GFY LCV, and GFY Shanghai are non-

resident entities. Nevertheless, Plaintiff contends that certain purchase and sale

transactions between Plaintiff and GFY Defendants provide a basis for this Court to

exercise both general and specific jurisdiction over GFY Defendants. For example,
Plaintiff argues that GFY purchased “tens of millions of dollars’ worth of fabric” over

several years and that the sales were “consummated” at Plaintiff’s office in Reidsville,

North Carolina, creating a “systematic and continuous” connection with North

Carolina that justifies a grant of general jurisdiction. (ECF No. 318, at pp. 20–21.)

Plaintiff also argues that it “sold tens of millions of dollars of fabric, mattress covers,

and mattress cover re-work to GFY . . . and purchased tens of millions of dollars in

mattress covers and fabric from GFY,” which “shows that the GFY entities

purposefully engaged in activities in, to, and through North Carolina subjecting them

to [specific] jurisdiction in North Carolina.” (ECF No. 318, at p. 20.) Defendants

argue that the transactions at issue occurred in other jurisdictions and that Plaintiff

has not established that the transactions relate to the current dispute. (Defs.’ Reply

Br., ECF No. 329, at pp. 5–8.)

39. The specific purchase and sale transactions4 (the “transactions”) to

which Plaintiff points in support of its argument are transactions between (1)

Plaintiff and GFY, and (2) Plaintiff and GFY LCV. The transactions include: (1)

GTA’s sale of approximately $17,900,000 of fabric and $440,000 of mattress covers to

GFY between November 2013 and July 2017, shipment terms F.O.B.5 China; (2)

GFY’s sale of over $34,000,000 of mattress covers and over $17,500,000 of fabrics to

4 To the extent Plaintiff relies on general allegations that GFY Defendants transacted
business in North Carolina, the Court finds such conclusory allegations insufficient to
support an exercise of jurisdiction over GFY Defendants.
5 The shipment term F.O.B. means “free on board” and refers to the place where the risk and

expense associated with a sale transfers from seller to buyer. G.S. § 25-2-319; Peed v.
Burleson’s Inc., 244 N.C. 437, 439–440 (1956) (“Where the contract of sale provides for a sale
f.o.b. the point of shipment, the title is generally held to pass . . . at the time of the delivery
of goods for shipment at the point designated.”).
GTA between 2013 and 2017, shipment terms F.O.B. China; (3) GTA’s mattress cover

re-work sales to GFY totaling upwards of $940,000, shipment terms F.O.B. Reidsville;

(4) GTA’s sales of approximately $1,475,000 of sourced fabric to GFY LCV, shipment

terms F.O.B. China; (5) GTA sales of approximately $8,399,000 of fabric to GFY LCV,

shipment terms F.O.B. Reidsville; and (6) GTA’s purchases of approximately $6,665

of fabric from GFY LCV, shipment terms F.O.B. El Salvador. (ECF No. 235.1, at ¶

5–8.)

40. GFY Defendants contend, and have provided evidence, that the

mattress cover re-work sales described above were not made to GFY, but instead

involved Plaintiff’s fabric produced by suppliers other than GFY Defendants, which

were imported by Dolven and paid for by someone other than GFY Defendants. (ECF

329.2, at ¶¶ 5–13.) GFY Defendants also have submitted affidavit evidence stating

that “GFY Defendants do not ship goods or other products to North Carolina or

elsewhere within the United States. Rather, when any GFY Defendants sell any

goods or products, the purchasers, including Dolven, arrange for pick[-]up of such

products outside the United States or otherwise arrange for third-party delivery and

import by entities unassociated with GFY Defendants.” (ECF 289.1, at ¶ 55.)

a. GFY Defendants’ purchases from and sales to Plaintiff in North Carolina
are not sufficient to confer general jurisdiction

41. Plaintiff first argues that the sales listed above allow this Court to

exercise general jurisdiction over GFY Defendants. (ECF No. 318, at pp. 17–20.) As

a preliminary matter, Plaintiff has not provided any evidence of any sales or purchase

transactions between Plaintiff and GFY Shanghai, and Plaintiff has failed to
establish that the Court has general personal jurisdiction over GFY Shanghai based

on any such transactions.

42. A court may assert general jurisdiction over foreign corporations “when

their affiliations with the State are so continuous and systematic as to render them

essentially at home in the forum State.” Daimler, 571 U.S. at 127 (citations and

quotations omitted). The United States Supreme Court and North Carolina courts

have recognized that this is an exacting standard.

43. In Daimler, the Supreme Court reviewed the Ninth Circuit’s decision to

grant general jurisdiction over defendant Daimler based on the contacts of Daimler’s

alleged agent, Mercedes Benz USA (“MBUSA”), in California. MBUSA was the

largest supplier of luxury cars to California and its sales in California accounted for

2.4% of Daimler’s worldwide sales. Id. at 123. However, the Supreme Court held

that the Ninth Circuit erred in exercising general jurisdiction over defendant Daimler

because, even if the Court imputed to Daimler the California contacts and sales of

Daimler’s alleged agent MBUSA, Daimler was not “at home” in California. Id. at

136–39. Notably, the Court reasoned that granting general jurisdiction based on the

fact that a non-resident defendant had substantial sales in a jurisdiction would make

non-resident defendants amenable to suit in every jurisdiction in which their sales

were sizeable, and would scarcely allow out of state defendants to “structure their

primary conduct with some minimum assurance as to where that conduct will and

will not render them liable to suit.” Id. at 139 (citations and quotations omitted).
Such reasoning is directly on point in this case to the extent Plaintiff argues that GFY

Defendants’ sizeable sales with Plaintiff should subject them to general jurisdiction.

44. In Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408 (2011), the

Court reviewed whether Texas courts erred in exercising general jurisdiction over a

non-resident defendant company against whom the plaintiff brought a wrongful

death claim arising from activities in Peru. Id. at 409–11. The Court framed the

general jurisdiction analysis as “whether [the contacts of defendant] constitute the

kind of continuous and systematic general business contacts the Court [has

previously recognized as sufficient in Perkins v. Benguet Consolidated Mining Co.,

342 U.S. 437 (1952)].”6 Id. at 416. The defendants’ contacts with Texas were

comprised of (1) a negotiation session in Houston involving Defendant’s CEO; (2)

purchases of helicopters, spare parts, and other accessories worth over $4 million

from a company in Texas; (3) pilot training in Texas; (4) personnel visits to Texas;

and (5) receipt of over $5 million in payments from Texas bank accounts. Id. at 410–

11. The Texas Supreme Court focused on the purchases and training trips in granting

general jurisdiction. Id. at 417. The U.S. Supreme Court, however, concluded that

“mere purchases, even if occurring at regular intervals, are not enough to warrant a

State’s assertion of in personam jurisdiction over a nonresident corporation in a cause

of action not related to those purchase transactions.” Id. at 418. In other words, even

6 In Perkins, the Court held an Ohio court properly exercised general jurisdiction over a

foreign corporation whose president and general manager maintained an office in Ohio and
held directors’ meetings, carried on correspondence relating to the business, distributed
salary checks, and otherwise directed company affairs from that office.
significant purchase transactions in Texas were insufficient to give rise to general

jurisdiction over the defendant.

45. Likewise, North Carolina courts, including this Court, have refused to

exercise general jurisdiction over a non-resident defendant based on evidence that it

does significant business in the State of North Carolina, unless evidence is presented

that the nature or amount of the business would render the defendant at home in

North Carolina. See e.g., Occidental Fire & Cas. Co. v. Cont'l Ill. Nat'l Bank & Tr.

Co., 689 F. Supp. 564, 568 & n.1 (E.D.N.C. 1988) (finding no general jurisdiction even

though the non-resident defendant's loan activity in the forum state exceeded $100

million); Ash v. Burnham Corp., 80 N.C. App. 459, 461–62, 343 S.E.2d 2, 3–4

(1986) (holding that the defendant’s sales to North Carolina customers, comprising

0.5% of its total annual sales, was insufficient to support jurisdiction); Weisman, 2014

NCBC LEXIS 41, at *12 (evidence that defendant-company “received only 3.6% of its

total sales volume from North Carolina” was “insufficient to support general

jurisdiction”). Indeed, this Court recently noted that the Business Court “and the

North Carolina appellate courts have yet to find a sufficiently ‘exceptional case’ after

Daimler to extend general jurisdiction to a corporation or a limited liability company

in North Carolina that has neither organized itself in this State nor located its

principal place of business here.” AYM Techs., LLC., 2018 NCBC LEXIS 14, at *19.

46. After reviewing the evidence and the relevant authority, the Court

concludes that it does not have general jurisdiction over GFY or GFY LCV. First,

Plaintiff has provided no context for the sales and purchase figures it supplies from
which the Court could conclude whether the volume of GFY and GFY LCV’s

transactions with Plaintiff constituted a significant portion of their sales for the

periods in question, nor what percentage of Plaintiff’s purchases and sales the

transactions constituted. Second, all but a small percentage of the transactions

between Plaintiff and GFY are “F.O.B. China”, and some of the transactions between

Plaintiff and GFY LCV are “F.O.B. China” or “F.O.B. El Salvador.” Therefore, a

substantial portion of the transactions upon which Plaintiff relies can be interpreted

as having been consummated in China or El Salvador and not in North Carolina. See

Pyrotek, Inc. v. Motionmaster, Inc., No. 1:04CV00549, 2006 U.S. Dist. LEXIS 57007,

at *12 (M.D.N.C. Feb. 22, 2006) (finding ,where plaintiff sought recovery for faulty

equipment it purchased from defendant, “[defendant]’s agreement to manufacture

the Equipment and send it [to plaintiff] ‘F.O.B. Vista, California’ [was] likely not

sufficient to give rise to jurisdiction in North Carolina”); see also Golden Belt Mfg. Co.

v. Janler Plastic Mold Corp., 281 F. Supp. 368 (M.D.N.C. 1967), aff’d, 391 F.2d 266

(4th Cir. 1968) (holding that exercising personal jurisdiction over the defendant in

North Carolina would offend due process where a contract was initiated by the

plaintiff for defendant, a Chicago plastic mold manufacturer, to ship molds to North

Carolina, F.O.B. Chicago); see also Bay Tobacco, LLC v. Bell Quality Tobacco Prods.,

LLC, 261 F. Supp. 2d 483, 494 (E.D.Va. 2003) (“[Defendant]’s F[.]O[.]B[.] delivery of

cigarettes to a common carrier in . . . North Carolina for transport into Virginia

diminishes the jurisdictional significance of such shipments. . . . [and] does not show

that [defendant] transacted business in [Virginia].”).
b. GFY’s and GFY LCV’s contacts with North Carolina are not sufficient to
confer specific jurisdiction on the Court

47. Plaintiff also argues that the transactions between itself and GFY, and

between itself and GFY LCV, support specific jurisdiction. “North Carolina exercises

specific jurisdiction over a party when it exercises personal jurisdiction in a suit

arising out of that party’s contacts within the state.” Fran's Pecans, Inc. v. Greene,

134 N.C. App. 110, 114, 516 S.E.2d 647, 650 (1999). “The alleged injuries must arise

out of activities defendants ‘purposefully directed’ toward the state’s residents.”

Stetser, 162 N.C. App at 521, 591 S.E.2d at 575 (quoting Tom Togs, Inc., 318 N.C. at

366, 348 S.E.2d at 786). In analyzing whether the sales transactions between

Plaintiff and GFY and Plaintiff and GFY LCV permit the exercise of specific personal

jurisdiction over GFY or GFY LCV the Court considers: “(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.” Banc of Am. Sec. LLC, 169 N.C. App. at 696, 611 S.E.2d

at 184.

48. Plaintiff makes only conclusory allegations and arguments in support of

its position that GFY’s and GFY LCV’s purchases and sales transactions with

Plaintiff provide a basis for specific jurisdiction. (ECF No. 318, at pp. 18–20.) For

example, Plaintiff claims that “[a]ll of [the GFY Defendants’] sales and purchases and

the manner in which they were obtained and achieved are the subject of GTA’s

lawsuit against the GFY entities.” (Id. at p. 18.) The Court already has concluded,

the GFY Defendants’ transactional contacts with North Carolina are not sufficient to
confer general jurisdiction. In addition, while North Carolina has an interest in

providing a forum for its residents to seek redress for injuries they suffer, Plaintiff

has not identified any other particular State interests implicated by the discreet

transactions at issue here. Most importantly, however, Plaintiffs do not allege that

the GFY Defendants directed conduct towards North Carolina from which their

claims in this lawsuit arise. Tom Togs, Inc., 318 N.C. at 365–66, 348 S.E.2d at 786

(The “relationship between the defendant and the forum must be such that he should

reasonably anticipate being haled into court there” (internal quotation marks

omitted). Rather, Plaintiffs contend that the GFY Defendants’ transactions have a

connection to North Carolina because they are the result of the alleged wrongdoing

by the individual defendants or Dolven, and since the Court has personal jurisdiction

over those parties it should exercise personal jurisdiction over the GFY Defendants.

The Court does not find Plaintiff’s argument persuasive, and concludes that Plaintiff

has failed to carry its burden of establishing that the Court should exercise personal

jurisdiction over GFY and GFY LCV based on alleged contacts arising from the sales

transactions between those companies and Plaintiff. Id. at 365, 348 S.E.2d at 786.

(“[T]he unilateral activity within the forum state of others who claim some

relationship with a non-resident defendant will not suffice” to confer specific

jurisdiction.).

E. Dolven and Ryan’s Management and Control of GFY Defendants

49. Finally, the Court addresses Plaintiff’s overarching contention: that the

Court should exercise personal jurisdiction over GFY Defendants because the GFY
Defendants are mere instrumentalities of Dolven “created . . . to facilitate the

diversion of corporate opportunities by Dolven away from” Plaintiff, and the GFY

Defendants are “controlled and managed” by Dolven and Ryan from North Carolina.

(ECF No. 261, at ¶¶ 9–12, 82; ECF No. 318, at pp. 12, 14.) Despite Plaintiff’s

protestations, the Court views this as a veil-piercing theory.

50. This Court will disregard an entity’s corporate form only if the

corporation is so operated as to be “a mere instrumentality or alter ego of the sole or

dominant shareholder.” State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C.

431, 440–41, 666 S.E.2d 107, 113–14, (2008) (citations and quotations omitted). To

show that a subsidiary is a mere instrument of a parent corporation or an individual,

a plaintiff must present evidence of:

(1) Control, not mere majority or complete stock control,
but complete domination, not only of finances, but of policy
and business practice in respect to the transaction attacked
so that the corporate entity as to this transaction had at
the time no separate mind, will or existence of its own; and

(2) Such control must have been used by the defendant
to commit fraud or wrong, to perpetrate the violation of a
statutory or other positive legal duty, or a dishonest and
unjust act in contravention of [a] plaintiff's legal rights;
and,

(3) The aforesaid control and breach of duty must
proximately cause the injury or unjust loss complained of.

Green v. Freeman, 367 N.C. 136, 145–46, 749 S.E.2d 262, 270 (2013) (quoting Glenn

v. Wagner, 313 N.C. 450, 455, 329 S.E.2d 326, 330 (1985)). Courts have relied on the

following types of evidence to justify piercing the corporate veil: “inadequate

capitalization, noncompliance with corporate formalities, lack of a separate corporate
identity, excessive fragmentation, siphoning of funds by the dominant shareholder,

nonfunctioning officers and directors, and absence of corporate records.” Id. at 145,

749 S.E.2d at 270. In the absence of such supporting evidence, however, courts will

not pierce the corporate veil to establish jurisdiction over non-resident defendants.

State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 188 N.C. App. 302, 306, 655

S.E.2d 446, 449 (2008) (holding that conclusory allegations concerning alter-ego

liability or corporate veil piercing, without any other supporting evidence, cannot

support exercising personal jurisdiction over a nonresident defendant); see also

Weisman, 2014 NCBC LEXIS 41, at *17 (holding same).

51. As an initial matter, Plaintiff has neither alleged nor provided evidence

that any GFY Defendant is a mere instrumentality of Dolven or Ryan. For example,

Plaintiff has not alleged that GFY Defendants are inadequately capitalized, fail to

follow corporate formalities, or do not maintain adequate corporate records,7 or that

Dolven is siphoning off funds from any GFY Defendants. Instead, Plaintiff points to

evidence that Ryan is listed as a director, representative, or manager of the various

GFY Defendants (ECF No. 318, at pp. 7–10); that Ryan, along with Timothy, Steven,

and James created Dolven and GFY, and GFY is owned by Dolven (Id. at pp. 13–14);

that the GFY Defendants are interrelated by their ownership structure (Id. at p. 14);

and that Ryan has ultimate authority over, and is involved in directing certain

operations of, GFY Defendants (Id. at pp. 14–17.) Plaintiff contends that this

7 To the contrary, Plaintiff has filed with the Court a number of documents and records filed

and/or maintained by the GFY Defendants that appear to demonstrate that they observe
formalities, make separate corporate filings, and maintain appropriate corporate records.
(See, e.g., ECF Nos. 235.3–235.6; 305.3.)
evidence establishes that “Ryan . . . along with Dolven . . . [is] in full operational

control of the GFY entities and, as such, his activities confer jurisdiction on the courts

of North Carolina.” (Id. at p. 14.)

52. Without more, the mere fact that Dolven is a parent or affiliate of GFY

Defendants does not confer jurisdiction over the GFY Defendants in North Carolina.

A court may not exercise general personal jurisdiction over a company simply because

its director, shareholder, parent company, subsidiary, or affiliate operates in or is

otherwise subject to general personal jurisdiction in a state. See, e.g., Daimler, 571

U.S. at 136 (concluding that “to subject foreign corporations to general jurisdiction

whenever they have an in-state subsidiary or affiliate [is] an outcome that would

sweep beyond even the ‘sprawling view of general jurisdiction’ we rejected in

Goodyear.” (citations omitted)); see also Goodyear, 564 U.S. at 929–30 (finding that

there can be no general personal jurisdiction over foreign subsidiaries of a corporation

based on contacts of parent corporation); Speedway Motorsports Int’l Ltd. v. Bronwen

Energy Trading, Ltd., 209 N.C. App. 474, 490, 707 S.E.2d 385, 395 (2011) (recognizing

that a subsidiary cannot be subjected to personal jurisdiction in a forum in which a

parent does business unless it has its own direct contacts or unless the two entities

“are part of the same whole and were not acting independently”).

53. Furthermore, despite Plaintiff’s allegations regarding Ryan’s control

and management of the GFY Defendants, it has not provided any evidence that Ryan

made any specific decisions for, or directed any specific conduct by, the GFY

Defendants from North Carolina. On the other hand, GFY Defendants have provided
evidence that GFY and GFY Shanghai maintain offices, and have management and

other employees responsible for their day-to-day operations located in China, and

GFY LCV has facilities and management and other employees in El Salvador. (ECF

No. 289.1, at ¶¶ 10, 11, 13, 15, 32, 33, 42, 44–48.)

54. Having thoroughly reviewed the evidence and arguments, the Court

concludes that Plaintiff has failed to carry its burden of establishing that the Court

may exercise personal jurisdiction over GFY, GFY Shanghai, or GFY LCV based on

a veil-piercing or alter ego theory. Therefore, GFY Defendants’ motion to dismiss

Plaintiff’s claims against GFY, GFY Shanghai, and GFY LCV for lack of personal

jurisdiction over those parties should be GRANTED.

CONCLUSION

55. In conclusion, the Plaintiff has carried its burden of establishing

grounds for asserting personal jurisdiction over GFY Coop, but has failed to establish

grounds for this Court to exercise jurisdiction over GFY, GFY LCV, or GFY Shanghai.

Therefore, it is ORDERED that:

56. Plaintiff’s Motions to Strike are DENIED;

57. GFY Defendants’ Motion is GRANTED with respect to GFY, GFY LCV,

and GFY Shanghai, and the claims against those Defendants are DISMISSED;

58. GFY Defendants’ Motion is DENIED with respect to the claims against

GFY Coop.
SO ORDERED, this the 14th day of November, 2018.

/s/ Gregory P. McGuire
Gregory P. McGuire
Special Superior Court Judge
for Complex Business Cases