Analysis of Prospect Marketing Group vs Chasnan - Case Study Example

PROSPECT MARKETING GROUP, INC., Plaintiff vs. CHASNAN, INCORPORATED d/b/a CASTLE ADVERTISING and DAVID CASTLE, Defendants a. Brief of the case This case involved Prospect Marketing Group, Inc., as the Plaintiff and Chasnan, Incorporated d/b/a Castle Advertising and David Castle as the Defendants (Prospect Mktg. Grp., Inc. v. Chasnan, Inc.,). This matter came before State of North Carolina County of Wake Court of Justice---Superior Court Division on July 10, 2012. The matter came before the court upon Defendants and Plaintiff’s motion to dismiss for lack of personal jurisdiction in accordance to rule 12(b)(2) of the North Carolina Rules of Civil procedure. Arguing on the basis of the procedural history of this case, Plaintiff filed a complaint against Defendants and one month later Defendants filed a motion for the same. b. Factual background of the case The complaint alleges for breach of contract as the first claim, violation of N.C. Gen. Stat. § 75-1.1 as the second claim, fraud and negligent misrepresentation as the third and fourth claim respectively. a. The plaintiff sought permanent and temporary injunctive relief against the defendants. b. Prospect Marketing Group, Inc. was a corporation established under the laws of the State of Nevada and Defendant Chasnan is incorporated and has its principal place of business in the city of California. c. While Castle (defendant) is a resident of California and is the shareholder defendant and principal officer, Plaintiff is also a marketing company publishing Business Leader Magazine d. At some point materials and over a number of years, the Defendant Chasnan, at the direction of Castle give direction on fliers to North Carolina on behalf of clients.1 And around this time both parties executed asset purchase agreement whereby Defendants transferred all rights interest in the assets and title of defendants to plaintiff. e. It was noted that defendants erred when it made a number of false presentation when negotiating the agreement.2 f. Defendants also breached the express terms of agreement by collecting but failing to remit a given accounts receivable and contravening a covenant not to compete included in the agreement. c. Application of relevant Rule of LawStatutory or Case Law To begin with, if the courts do not find or lacks personal jurisdiction regarding a defendant, dismissal in accordance to a motion under the Rule 12(b) (2) is proper. In addition to this, personal jurisdiction explains the power of a certain court to require a litigant to make appearance to defend a lawsuit. The need is enshrined in the due process guaranteed by the 14th amendment f the United States of Constitution.3 On the other hand, personal jurisdiction is twofold; specific jurisdiction and general jurisdiction.4 As noted in other jurisdictions, there is a possibility that a state court can exercise general personal jurisdiction on individuals in the state, irrespective of where the events giving rise to the action occurred. As seen in the case involving Hertz Corp. v. Friend, 130 S. Ct. 1181, 1187 (2010), a corporation can be a subject to general personal jurisdiction in the state of such incorporation, in the state of its principal place of such activity or business. Or another relevant case that can be applied in here regards Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851(2011). Borrowing ruling from other jurisdictions, the cause of action may arise directly from the purposeful contacts with the forum from the defendants.5 In ccordSteag Energy Services GMBH v. Ebinger, 2012 NCBC2 the juries noted that where there is existence of specific jurisdiction, a defendant might have a fair warning that can be sued in a state for injuries arising from activities purposefully engineered toward state’s residents. Bringing this case in the picture, Plaintiff did not allege that the cause of action came as a result of Defendant’s contacts with North Carolina, but however, arises from contractual obligation under agreement, which itself has no connection to any defendant’s alleged contacts with the forum.In as much, this court is not able exercise a given jurisdiction over Claim of the Plaintiff. Presenting argument from the perspective of North Carolina Long-Arm Statute, it needs to be distinguished that whether a North Carolina court has jurisprudence on personal jurisdiction is twofold. First, the jurisdiction needs to be exercised in accordance with the due process clause.6 Secondly, there need to be authorisation from statutory for the exercise of jurisdiction in the long-arm statute. Going by G.S. § 1-75.4(1)(d), North Carolina’s long-term statute explains jurisdiction over claims coming from outside the State against a party who, at the time of service, "is engaged in substantial activity within this State." That is, it is required by statute that the defendant be engaged in substantial activity at the time of service. Therefore based on the agreement facts raised and Plaintiff's Complaint that was not filed contemporaneously with the close of the agreement, the plain language of G.S.1-75.4(1)(d), as the exercise of jurisdiction is improper. As noted by the Plaintiff during the proceeding, G.S. 1-75.4(1) (d) was to extend personal jurisdiction to the greatest extent due process would permit.7 However, the court from North Carolina Supreme Court has ignored the literal language of the statute by favouring such a broad interpretation. In addition, the court did not allow the exercise of personal jurisdiction as enshrined in G.S. 1-75.4(1) (d) when it heard the case involving Skinner v. Preferred Credit. The decision was based on the plain language of the statute with reference to 361 N.C. 114, 119 (2006). Arguing from general jurisdiction, supposing this court found and made a conclusion that the circumstances or the issues brought before it warranted an exception from the plain language as per G.S. 1-75.4(1) (d), personal jurisdiction would still not be proper basing on traditional general jurisdiction analyses. On other hand, core of whether the court has the mandate of exercising general personal jurisdiction is dependent on whether a defendant maintained the given continuous and systematic contacts "as to render [it] essentially at home in the forum State."Goodyear, 131 S. Ct. at 2851. This is exactly what the court did not consider. In their interpretation, the judges failed to link the defendant and the forum such that the defendant ought to have reasonably anticipated being haled into the court there.8 What is seen instead is that the threshold level of minimum contacts needed to confer general jurisdiction is higher compared with specific jurisdiction. As noted in other jurisdictions, determining whether there exist sufficient contacts, a court can employ a multi-factor analysis that considers (a) the quality and the nature of the contacts (b) the quality of the contacts (c) the interest of the forum state (d) the connection and the source of the claim to the contacts and (e) convenience to the party.9 Brining another area that the court erred, one fact has to be established first. That is, plaintiff alleges that Chasnan, at the direction of Castle, kept or maintained a given contacts with North Carolina. These contacts are established by the court to have been largely in the form of direct mail that Chasnan sent on behalf of the client into North Carolina. Plaintiff also alleges that defendants gained thousands of dollars due to their work in North Carolina. Plaintiff however, did not provide ground to argue that defendant Chasnan has ever had a registered employee or agent in North Carolina or otherwise maintained a physical presence anywhere within or outside San Diego, Carolina. Applying the factors as argued in Rosetto USA and even making assumptions that email sent by defendant Chasnan on behalf of the clients is as high as contended by the plaintiff, the court erred in considering this as evidence since these contacts do not support the exercise of general jurisdiction over defendants.10 In totality, plaintiff claimed or alleged that at some instances of points in time Chasnan caused or sent an unspecified number of pieces of direct mail into North Carolina. In as much, plaintiff has failed to establish when and how these contacts occurred and with the extent of frequency. At long run, the five judged bench established that quality and quantity of the contacts alleged were not enough to establish and sustain general jurisdiction over defendants. Concluding the case on the 10th day of October 2013, defendants’ motion that sought to dismiss for lack of personal jurisdiction was unanimously granted by the court. Other crucial judgement passed was that taxable costs were to be charged to plaintiff. Read More