Opinion
No. COA15-863
05-17-2016
CENTOR, INC., Plaintiff, v. MAKINO INC., et al., Defendants.
Honeycutt Law Firm, PLLC, by John B. Honeycutt, Jr., for plaintiff-appellee. Hamilton Stephens Steele and Martin, PLLC, by Adrianne Chillemi, for defendant-appellant.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. Mecklenburg County, No. 14 CVS 10733 Appeal by defendant from order entered 23 March 2015 by Judge Carla Archie in Mecklenburg County Superior Court. Heard in the Court of Appeals 26 January 2016. Honeycutt Law Firm, PLLC, by John B. Honeycutt, Jr., for plaintiff-appellee. Hamilton Stephens Steele and Martin, PLLC, by Adrianne Chillemi, for defendant-appellant. BRYANT, Judge.
Where the trial court failed to determine whether the contract was entered into in North Carolina, we remand for further proceedings.
On 11 June 2014, plaintiff CenTor, Inc., filed a complaint against defendants Makino, Inc. and Makino, Inc. d/b/a Single Source Technologies, in Mecklenburg County Superior Court. In the complaint, CenTor was alleged to be a corporation duly organized and existing under the laws of the State of North Carolina, with its principal place of business in Mecklenburg County. Defendants Makino, Inc. and Makino, Inc. d/b/a Single Source Technologies, were alleged to be corporations organized and existing under the laws of the State of Delaware, authorized to do business in the State of North Carolina, specifically, Mecklenburg County.
Per the complaint, CenTor was in the business of manufacturing, promoting, and selling machine tools, including horizontal and vertical machining centers. On 1 July 2013, Makino delivered to CenTor a proposal for the sale, delivery, installation, setup, and programming of a Makino a51nx Horizontal Machining Center (the Machine). "[T]he sale of the Machine was made to [CenTor] by invoice dated August 28, 2013." The total amount invoiced for the Machine was $281,495.00. CenTor's initial payment was $28,141.50, ten percent, plus an additional $100,000.00, for a total of $128,141.50. During the proposal period, Makino's representatives expressly represented that the Machine would be set up and in full production within one week of delivery and that in production, the Machine's cycling time would be seven minutes and eleven seconds. Installation took between one and two months, and in operation, the average cycling time was over twelve minutes.
Due to the delay in the Machine's installation, as well as the Machine's inability to meets its advertised production standards, CenTor alleged that its customers stopped placing orders and/or cancelled orders. Following "[a] lengthy dialogue . . . between the parties during and after which Makino was unwilling and/or unable to correct the deficiencies in the Machine and to cure [its] non-conforming nature," CenTor rejected the Machine and revoked any previous acceptance by written notice dated 6 June 2014. CenTor sought recovery from Makino on the theories of breach of contract, breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, negligent misrepresentation, unjust enrichment, and unfair and deceptive trade practices.
On 25 August 2014, Makino's representatives filed a Motion to Dismiss, Answer and Affirmative defenses. In pertinent part, the allegations in the motion to dismiss state that on 8 July 2013, a proposal for the sale and purchase of the Machine was submitted to Vibration Solutions, LLC. The proposal included terms and conditions of sale. On 18 July 2013, Vibration Solutions, LLC, returned an executed purchase order. The executed purchase order did not propose any additional terms or amendments to the terms and conditions of sale. On 6 August 2013, Makino delivered an order acknowledgment to Vibration Solutions, LLC, which acknowledged receipt of the Purchase Order and contained "substantially identical terms and conditions as those included in the proposal." In its motion to dismiss, Makino asserted that the trial court lacked subject matter jurisdiction because the terms and conditions of sale listed in the Order Acknowledgement provided for exclusive jurisdiction over disputes relating to the sale and purchase of the Machine in the courts of Hamilton and Warren Counties, Ohio. Makino also asserted that "[t]he Machine [was] the subject of a pending action in Hamilton County, Ohio . . . ."
The motion to dismiss also asserted that CenTor "is not the real party in interest; rather this [a]ction should be prosecuted, if at all, by Vibration Solutions, LLC." Makino denied that any proposal or negotiations occurred between representatives of Makino and CenTor and denied the existence of a contract between Makino and CenTor for the sale and purchase of the Machine.
On 20 February 2015, a Motion to Dismiss, or in the alternative, Motion for Leave to Amend Answer was filed on behalf of Makino. Included with the motion was an affidavit of Tom Scherpenberg, Chief Finance Manager for Makino. In his affidavit, Scherpenberg averred that on 8 July 2013, Makino furnished Vibration Solutions with a proposal for the sale and purchase of the Machine. The proposal included Terms and Conditions of Sale governing the sale of the Machine. On 18 July 2013, Vibration Solutions accepted Makino's proposal by forwarding to Makino a Purchase Order and a check, issued by CenTor, for ten percent of the purchase price of the Machine. Makino issued an Order Acknowledgment for receipt of the Purchase Order and down payment. Makino shipped the Machine on 28 August 2013. Makino completed installation of the Machine on 23 September 2013. "Vibration Solutions made no further payments towards the purchase of the Machine."
On 6 March 2015, Makino filed an Amended Answer, Affirmative Defenses and Counterclaim acknowledging that Makino had entered into a contract with CenTor.
On 23 March 2015, the trial court entered an order following a hearing conducted during the 5 March 2015 session of Mecklenburg County Superior Court, the Honorable Carla Archie, Judge presiding. The order denied Makino's motion to dismiss the Complaint pursuant to Rule 12(b)(1) and (3). The trial court made the following findings:
1. The transaction between Centor, Inc. and Makino, while a non-consumer transaction, was not a non-consumer loan transaction under N.C. Gen. Stat. sec. 22B-3.Pursuant to N.C. Gen. Stat. § 1-277, the trial court certified for immediate appeal the 23 March order denying the motion to dismiss based upon the forum selection clause.
2. The choice of venue provision in the Makino Proposal to CenTor, Inc. is therefore void and unenforceable under N.C. Gen. Stat. sec. 22B-3.
Makino appeals.
On appeal, Makino questions whether the trial court erred in denying its motion to dismiss CenTor's complaint pursuant to the contract's forum selection provision.
Interlocutory Appeal
We first consider whether Makino's appeal is properly before this Court.
Judgments and orders of the Superior Court are divisible into these two classes: (1) Final judgments; and (2) interlocutory orders. A final judgment is one which disposes of the cause as to all the parties, leaving nothing to be judicially determined between them in the trial court. An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.Veazey v. Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950) (citations omitted). "Generally, there is no right of immediate appeal from interlocutory orders and judgments." Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990).
A party may appeal an interlocutory order if it affects a substantial right claimed in any action or proceeding and will work injury to the appellant if not corrected before final judgment. A substantial right is a legal right affecting or involving a matter of substance as distinguished from matters of form; a right materially affecting those interests which a man is entitled to have preserved and protected by law: a material right. Whether an order affects a substantial right is decided on a case-by-case basis.Pentecostal Pilgrims & Strangers Corp. v. Connor, 202 N.C. App. 128, 132, 688 S.E.2d 81, 84 (2010) (citations and quotation marks omitted).
In Cox v. Dine-A-Mate, Inc., 129 N.C. App. 773, 501 S.E.2d 353 (1998), this Court stated that "[a]n immediate appeal is permitted where an erroneous order denying a party the right to have the case heard in the proper court would work an injury to the aggrieved party that would not be corrected if no appeal was allowed before the final judgment." Id. at 775, 501 S.E.2d at 354 (citation and quotation marks omitted); see also L.C. Williams Oil Co. v. NAFCO Capital Corp., 130 N.C. App. 286, 288, 502 S.E.2d 415, 417 (1998) (citing Cox, 129 N.C. App. 773, 501 S.E.2d 353 for the proposition that an order denying a motion to dismiss based on a forum selection clause is immediately appealable). Thus, Makino's appeal from the 23 March 2015 order which denied Makino's motion to dismiss CenTor's complaint pursuant to Rule 12(b)(3), where the contract entered into specified a forum selection clause, is properly before this Court.
The contract
In the Order Acknowledgement issued by Makino, within the Terms and Conditions of Sale, is a section titled Governing Law and Forum Selection; Limitations.
This contract, the construction of this contract, all rights and obligations between Seller and Buyer, and any and all claims arising out of or relating to the subject matter of this contract (including all tort claims) will be governed by the laws of the State of Ohio, U.S.A., without regard to its conflict of laws principles. The rights and obligations of the parties to this contract will not be governed by the provisions of the 1980 UN Convention on Contracts for the International Sale of Goods; rather these rights and obligations will be governed by the laws of Ohio. Any litigation or other legal proceeding based upon or in any way related to this contract, its subject matter, or the rights or obligations of Seller and Buyer, will be brought exclusively in an appropriate court of competent jurisdiction (state or federal) located in Hamilton County, Ohio or Warren County Ohio, and must be brought within two (2) years after the claim accrued. Any action brought in any such court may not be transferred or removed to any other court. Each party consents to the exercise of jurisdiction over it by the above-named courts as its freely negotiated choice of forum for all actions subject to this forum selection clause.
Analysis
Pursuant to North Carolina General Statutes, section 22B-3,
[e]xcept as otherwise provided in this section, any provision in a contract entered into in North Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from the contract to be instituted or heard in another state is against public policy and is void and unenforceable.N.C. Gen. Stat. § 22B-3 (2015) (emphasis added).
Standard of review
"Because the disposition of forum selection matters is highly fact-specific, we employ the abuse-of-discretion standard to review a trial court's decision concerning clauses on venue selection." Parson v. Oasis Legal Fin., LLC, 214 N.C. App. 125, 128, 715 S.E.2d 240, 242 (2011) (citation and quotation marks omitted).
Makino contends that Section 22B-3 does not void or render unenforceable the forum selection clause as stated in the Order Acknowledgement because the contract was not entered into in North Carolina. An explicit determination by the trial court of whether the contract was entered into in North Carolina is essential to any analysis of the remaining issues in this case. Therefore, we remand this matter to the trial court for further proceedings.
The threshold question for determining if the contract's forum selection clause violates North Carolina law . . . is a determination of where the instant contract was formed.
It is well-accepted that
"the test of the place of a contract is as to the place at which the last act was done by either of the
parties essential to a meeting of minds. Until this act was done there was no contract, and upon its being done at a given place, the contract became existent at the place where the act was done. Until then there was no contract."
Szymczyk v. Signs Now Corp., 168 N.C. App. 182, 187, 606 S.E.2d 728, 733 (2005). In Szymczyk, the terms of the agreement were discussed by representatives of the plaintiffs and the defendant. Id. The plaintiffs signed the agreement in North Carolina and then returned the contract to the defendant, where the defendant's president signed the contract in Florida. Id. This Court held that the last act essential to the formation of the contract was the signing that took place in Florida. "As the contract was formed in Florida, N.C. Gen. Stat. § 22B-3 does not apply to the forum selection clause in the instant agreement." Id.
Bundy v. Commercial Credit Co., 200 N.C. 511, 515, 157 S.E. 860, 862 (1931) (citations omitted).
Here, the record before us reflects the following sequence of events: In early July 2013, Makino delivered to CenTor a proposal for the sale, delivery, installation, setup, and programming of the Machine; the proposal required a ten percent down payment of the purchase price of the Machine; and on or about 18 July 2013, CenTor sent to Makino a check in the amount of $28,141.50, constituting a ten percent down payment for the purchase of the Machine. Though disputed, the record does present evidence that on or about 6 August 2013, Makino delivered to CenTor an Order Acknowledgement acknowledging receipt of CenTor's Purchase Order, providing payment terms following installation of the Machine, and an estimated delivery date. If found to be a valid communication between the parties, initiated by Makino from a location outside of North Carolina, such would constitute strong evidence that the last essential act in the formation of the contract between Makino and CenTor occurred outside of North Carolina. See id. ; see also Parson, 214 N.C. App. 125, 715 S.E.2d 240 (reviewing a trial court's decision on a venue selection clause for abuse of discretion). We note that in the trial court's 23 March 2015 order denying Makino's motion to dismiss, the trial court did not specifically find that the contract was entered into in North Carolina, and we will not make such an assumption. For a determination of whether the contract was entered into in North Carolina, we remand the matter to the trial court for further proceedings.
REMANDED.
Judges DILLON and ZACHARY concur.
Report per Rule 30(e).