Embark, LLC v. 1105 Media, Inc.

NO. COA13-263

NORTH CAROLINA COURT OF APPEALS

Filed: 7 January 2014

EMBARK, LLC and DAVID B. WHEELER,
Plaintiffs,

v. Mitchell County
No. 12 CVS 49
1105 MEDIA, INC.,
Defendant.

Appeal by defendant from order entered 17 October 2012 by

Judge C. Philip Ginn in Mitchell County Superior Court. Heard in

the Court of Appeals 28 August 2013.

Adams, Hendon, Carson, Crow and Saenger, P.A., by Robert C.
Carpenter, for plaintiffs-appellees.

Van Winkle, Buck, Wall, Starnes & Davis, P.A., by Heather
Whitaker Goldstein, Larry McDevitt and David M. Wilkerson,
for defendant-appellant.

GEER, Judge.

Defendant 1105 Media, Inc. appeals from an order (1) denying

its motion to dismiss for lack of personal jurisdiction as to

plaintiff David B. Wheeler's claims and (2) deferring ruling on

its motion to dismiss as to plaintiff Embark, LLC's claims.

Because the trial court's unchallenged findings of fact support

its conclusion that (1) the exercise of personal jurisdiction

satisfies the requirements of our State's long arm statute, N.C.
 -2-
Gen. Stat. § 1-75.4 (2011), and (2) 1105 Media had sufficient

minimum contacts with the State to satisfy the requirements of due

process, we affirm the trial court's order as to Wheeler's claims.

We further hold that the trial court did not abuse its discretion

in deferring any ruling as to Embark's claims pending additional

discovery.

Facts

Plaintiff Wheeler is the president, founder, and sole

employee of plaintiff Embark, an event planning company organized

in Illinois on 25 September 2007. Defendant 1105 Media is a

Delaware corporation with its principal place of business in

California. Neal Vitale is the president and Chief Executive

Officer of 1105 Media. David Myers is the Vice President of Event

Operations at 1105 Media.

On 29 March 2011, Wheeler, Embark, and 1105 Media entered

into a contract as a result of which Embark became a division of

1105 Media and Wheeler became an employee of 1105 Media and the

head of "Embark Events, a division of 1105 Media." The contract

became effective 1 April 2011 and was terminable by either party

after 1 January 2012 with 12 months notice. 1105 Media terminated

the contract on 31 August 2011 without providing Wheeler or Embark

any reason for the termination and refused to pay Wheeler's salary

or other benefits after 31 August 2011.
 -3-
Wheeler and Embark filed an action for breach of contract

against 1105 Media on 9 March 2012 in Mitchell County Superior

Court. 1105 Media moved to dismiss for lack of personal

jurisdiction on 30 April 2012. On 17 October 2012, the trial court

entered an order denying 1105 Media's motion to dismiss as to the

claims of Wheeler, but withheld ruling on the motion to dismiss as

to the claims of Embark.

In support of its decision, the trial court made the following

findings of fact. Wheeler, the president and founder of Embark,

was a resident of Mitchell County, North Carolina, and had been

since August 2010. 1105 Media was at all relevant times a Delaware

corporation with its principal place of business in California.

Prior to entering into a contract with 1105 Media, Wheeler,

on multiple occasions, told Mr. Vitale, Mr. Myers, and other 1105

Media employees that he lived in and operated Embark from North

Carolina. He also provided 1105 Media with Embark business cards

that listed Embark's North Carolina address.

The contract between Wheeler, Embark, and 1105 Media was

negotiated via email and telephone communications, and Wheeler

wrote many of the emails and placed most of the telephone calls

from North Carolina. Although Wheeler invited Mr. Myers and Mr.

Vitale to North Carolina on several occasions, no officers or

agents of 1105 Media ever came to North Carolina to meet with
 -4-
Wheeler or for any other purpose related to the contract. The

contract was signed by the parties in Washington, D.C.

The contract was an employment contract between Wheeler and

1105 Media. The trial court found that it was unclear how the

contract affected Embark, but, at Mr. Vitale's suggestion, Embark

operated as a division of 1105 Media headed by Wheeler. The name

of the division, coined by Mr. Myers, was "Embark Events, a

Division of 1105 Media, Inc."

During his employment with 1105 Media, Wheeler lived and

worked in Mitchell County, North Carolina, where he performed 75%

of his duties for 1105 Media. All of his travel originated from

North Carolina, and he did not perform any of his duties for 1105

Media at any of their other offices. He maintained an office and

home phone number with a North Carolina area code, paid income and

property taxes in North Carolina, and maintained a personal North

Carolina checking and savings account. He received health care in

North Carolina that was covered by 1105 Media's health insurance

plan.

1105 Media paid for the rent and telephone bill for Wheeler's

office in Mitchell County, and, at Wheeler's request, shipped his

work computer to the North Carolina office. 1105 Media paid a

monthly allowance of $450.00 for Wheeler's car, which was titled

in North Carolina. 1105 Media directly deposited Wheeler's
 -5-
paycheck into his North Carolina checking account, paid North

Carolina payroll taxes, and had an "employer account number" with

the North Carolina Employment Security Commission. No one at 1105

Media ever brought up any concerns about Wheeler living and working

in North Carolina.

1105 Media marketed Embark Events and Wheeler as part of the

1105 Media brand and operation. It created specific 1105 Media

thank you cards for Wheeler that he sent to 1105 Media clients.

The cards contained Wheeler's name, the Embark Events logo, and

listed the company name as "Embark Events, a division of 1105

Media, Inc." The only address on the card was the North Carolina

office address.

Based on its findings, the trial court concluded that North

Carolina had jurisdiction over Wheeler's claims against 1105 Media

pursuant to North Carolina's Long Arm Statute, N.C. Gen. Stat. §

1-75.4(5), and that 1105 Media had sufficient minimum contacts

with North Carolina such that it had purposefully availed itself

of the jurisdiction of North Carolina.

The trial court also concluded that it was unclear whether

the court had jurisdiction over 1105 Media with respect to Embark's

claims. The order, therefore, denied 1105 Media's motion to

dismiss as to Wheeler's claims, but withheld ruling as to Embark's
 -6-
claims until the parties completed discovery. 1105 Media appealed

the order to this Court.1

I

"In order to determine whether North Carolina courts have

personal jurisdiction over a nonresident defendant, a court must

apply a two-step analysis: 'First, the transaction must fall within

the language of the State's "long-arm" statute. Second, the

exercise of jurisdiction must not violate the due process clause

of the fourteenth amendment to the United States Constitution.'"

Wells Fargo Bank, N.A. v. Affiliated FM Ins. Co., 193 N.C. App.

35, 39, 666 S.E.2d 774, 777 (2008) (quoting Tom Togs, Inc. v. Ben

Elias Indus. Corp., 318 N.C. 361, 364, 348 S.E.2d 782, 785 (1986)).

"The standard of review to be applied by a trial court in

deciding a motion under Rule 12(b)(2) depends upon the procedural

context confronting the court." Banc of Am. Secs. LLC v. Evergreen

Int'l Aviation, Inc., 169 N.C. App. 690, 693, 611 S.E.2d 179, 182

(2005). When, as here, both the defendant and the plaintiff submit

affidavits addressing personal jurisdiction issues, "'the court

1Although the order denying 1105 Media's motion to dismiss is
interlocutory, this Court has jurisdiction over the appeal
pursuant to N.C. Gen. Stat. § 1-277 (2011) because 1105 Media
argued that it lacked minimum contacts with North Carolina. See
Love v. Moore, 305 N.C. 575, 581, 291 S.E.2d 141, 146 (1982)
("[T]he right of immediate appeal of an adverse ruling as to
jurisdiction over the person, under [N.C. Gen. Stat. § 1–277(b)],
is limited to rulings on 'minimum contacts' questions, the subject
matter of Rule 12(b)(2).")
 -7-
may hear the matter on affidavits presented by the respective

parties, . . . [or] the court may direct that the matter be heard

wholly or partly on oral testimony or depositions.'" Id. at 694,

611 S.E.2d at 183 (quoting N.C.R. Civ. P. 43(e)). "If the trial

court chooses to decide the motion based on affidavits, '[t]he

trial judge must determine the weight and sufficiency of the

evidence [presented in the affidavits] much as a juror.'" Id.

(quoting Fungaroli v. Fungaroli, 51 N.C. App. 363, 367, 276 S.E.2d

521, 524 (1981)).

The standard of review for this Court is "'whether the

findings of fact by the trial court are supported by competent

evidence in the record[.]'" Miller v. Szilagyi, ___ N.C. App.

___, ___, 726 S.E.2d 873, 877 (2012) (quoting Bell v. Mozley, ___

N.C. App. ___, ___, 716 S.E.2d 868, 871 (2011), disc. review

denied, 365 N.C. 574, 724 S.E.2d 529 (2012)). Here, neither party

challenges the sufficiency of the evidence to support the trial

court's findings of fact, and therefore, they are "'presumed to be

supported by competent evidence and [are] binding on appeal.'"

Id. at ___, 726 S.E.2d at 877 (quoting Bell, ___ N.C. App. at ___,

716 S.E.2d at 871).

A. Long Arm Statute

1105 Media first argues that the trial court erred in

concluding that jurisdiction was proper pursuant to North
 -8-
Carolina's Long Arm Statute, N.C. Gen. Stat. § 1-75.4(5), which

states, in relevant part, that jurisdiction is proper in any action

which:

a. Arises out of a promise, made anywhere to
the plaintiff or to some third party for
the plaintiff's benefit, by the defendant
to perform services within this State or
to pay for services to be performed in
this State by the plaintiff; or

b. Arises out of services actually performed
for the plaintiff by the defendant within
this State, or services actually
performed for the defendant by the
plaintiff within this State if such
performance within this State was
authorized or ratified by the defendant;
or

c. Arises out of a promise, made anywhere to
the plaintiff or to some third party for
the plaintiff's benefit, by the defendant
to deliver or receive within this State,
or to ship from this State goods,
documents of title, or other things of
value; . . .

1105 Media argues that the requirements of N.C. Gen. Stat. §

1-75.4(5)(b) were not met because that section requires that any

services actually performed in North Carolina be "authorized or

ratified by the defendant." According to 1105 Media, since the

trial court made no findings as to whether 1105 Media authorized

or ratified Wheeler's performance in North Carolina, the trial

court's conclusion is not supported by its findings of fact.
 -9-
However, based on our review of the order, the trial court

did make sufficient findings supporting the conclusion that

Wheeler's performance was "authorized or ratified." The court

found that 1105 Media paid for Wheeler's North Carolina office

space, directly deposited Wheeler's paycheck into his North

Carolina checking account, paid North Carolina payroll taxes,

never brought up any concerns about Wheeler living and working in

North Carolina, created specific 1105 Media thank you cards with

Wheeler's North Carolina address for him to send to 1105 Media

clients, paid the telephone bill for Wheeler's North Carolina

office, and shipped a computer to his office. These findings are

more than enough to support the conclusion that Wheeler's

performance of services in North Carolina for 1105 Media was

authorized and ratified by 1105 Media.

In any event, although 1105 Media does not address N.C. Gen.

Stat. § 1-75.4(5)(a) or (c), the trial court's findings of fact

also establish that the requirements for those subsections of the

statute are satisfied. As provided in N.C. Gen. Stat. § 1-

75.4(5)(a), 1105 Media promised to pay Wheeler for the services

Wheeler was to perform under his employment contract in North

Carolina. Likewise, N.C. Gen. Stat. § 1-75.4(5)(c) is met by the

trial court's finding that 1105 Media shipped to Wheeler's North

Carolina office a work computer and directly deposited Wheeler's
 -10-
salary into his North Carolina bank account. Both the computer

and paychecks are "things of value." N.C. Gen. Stat. § 1-

75.4(5)(c). See Lab. Corp. of Am. Holdings v. Caccuro, 212 N.C.

App. 564, 567, 712 S.E.2d 696, 700 (finding payments sent from

employer to employee during employment relationship constituted

"thing of value" for purposes of long arm statute), appeal

dismissed and disc. review denied, 365 N.C. 367, 719 S.E.2d 623

(2011).

The trial court, therefore, properly concluded that

jurisdiction existed under North Carolina's long arm statute.

B. Minimum Contacts

Under the Due Process Clause, a court may exercise personal

jurisdiction over a non-resident defendant only if there exists

"sufficient 'minimum contacts' between the nonresident defendant

and our state 'such that the maintenance of the suit does not

offend traditional notions of fair play and substantial justice.'"

Skinner v. Preferred Credit, 361 N.C. 114, 122, 638 S.E.2d 203,

210 (2006) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310,

316, 90 L. Ed. 95, 102, 66 S. Ct. 154, 158 (1945)). More

specifically, "[i]n each case, there must be some act by which the

defendant purposefully avails himself of the privilege of

conducting activities within the forum state, thus invoking the

benefits and protections of its laws; the unilateral activity
 -11-
within the forum state of others who claim some relationship with

a non-resident defendant will not suffice." Tom Togs, 318 N.C. at

365, 348 S.E.2d at 786. Instead, the "relationship between the

defendant and the forum must be 'such that he should reasonably

anticipate being haled into court there.'" Id. (quoting World–

Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 62 L. Ed. 2d

490, 501, 100 S. Ct. 559, 567 (1980)).

"There are two types of personal jurisdiction. General

jurisdiction exists when the defendant's contacts with the state

are not related to the cause of action but the defendant's

activities in the forum are sufficiently 'continuous and

systematic.' Specific jurisdiction exists when the cause of action

arises from or is related to defendant's contacts with the forum."

Skinner, 361 N.C. at 122, 638 S.E.2d at 210 (internal citation

omitted). Here, the trial court denied the motion to dismiss as

to Wheeler's claims based on specific jurisdiction.

For specific jurisdiction, the focus is on "the relationship

among the defendant, this State, and the cause of action." Tom

Togs, 318 N.C. at 366, 348 S.E.2d at 786. In determining whether

minimum contacts exist, our courts examine several factors: "'(1)

the quantity of the contacts; (2) the quality and nature of the

contacts; (3) the source and connection of the cause of action to

the contacts; (4) the interests of the forum state, and (5) the
 -12-
convenience to the parties.'" Cambridge Homes of N.C. Ltd. P'ship

v. Hyundai Constr., Inc., 194 N.C. App. 407, 412-13, 670 S.E.2d

290, 295-96 (2008) (quoting Cooper v. Shealy, 140 N.C. App. 729,

734, 537 S.E.2d 854, 857-58 (2000)). "'A contract alone may

establish the necessary minimum contacts where it is shown that

the contract was voluntarily entered into and has a 'substantial

connection' with this State.'" Banc of Am. Secs., 169 N.C. App.

at 696, 611 S.E.2d at 184 (quoting Williamson Produce, Inc. v.

Satcher, 122 N.C. App. 589, 594, 471 S.E.2d 96, 99 (1996)).

In Better Bus. Forms, Inc. v. Davis, 120 N.C. App. 498, 499,

462 S.E.2d 832, 833 (1995), this Court held that there was personal

jurisdiction over non-resident defendants for breach of a contract

to purchase a North Carolina business. The plaintiff in Better

Business was a "Florida corporation with an office and place of

business in Forsyth County, North Carolina." Id. It sold an

operating division of its company, which had sales offices in

Winston-Salem, North Carolina and Roanoke, Virginia, to a Virginia

corporation owned by the defendants. Id. After the merger, the

North Carolina sales office "continued to do all of the

administrative work necessary to service the Winston-Salem

operation," and generated half of the company's sales. Id. at

501, 462 S.E.2d at 834.
 -13-
In its due process analysis, this Court noted that the "active

negotiations to purchase a North Carolina business, some of which

were conducted in North Carolina, demonstrate a purposeful attempt

by defendants to avail themselves of the privilege of conducting

business in this State." Id. at 500, 462 S.E.2d at 834. The Court

found it insignificant that one of the individual defendants had

never stepped foot in North Carolina or personally conducted or

managed any of the North Carolina activities, concluding instead

that "jurisdiction here is based on the benefits received by

defendants from the underlying contract which has a substantial

connection with North Carolina." Id. at 501, 462 S.E.2d at 834.

We believe that the facts here parallel those in Better

Business. The trial court's findings show that 1105 Media

voluntarily entered into a contract whereby it created a division

of its company that had an office and head of operations in North

Carolina. 1105 Media negotiated the contract knowing that Wheeler

was a resident of North Carolina and that Embark was operated out

of North Carolina.2 1105 Media's proposal to make Embark a division

of 1105 Media and hire Wheeler to head the division "demonstrate[s]

2Defendant argues that the trial court made no findings as to
1105 Media's knowledge that Wheeler resided in and operated Embark
from North Carolina. We disagree. The trial court's finding of
fact that Wheeler told 1105 Media's officers that he lived in North
Carolina and operated Embark from this State is a sufficient
finding regarding 1105 Media's knowledge of those facts.
 -14-
a purposeful attempt by [1105 Media] to avail [itself] of the

privilege of conducting business in this State." Id. at 500, 462

S.E.2d at 834.

Additionally, 1105 Media's performance during the course of

the contract further demonstrates that the contract at issue in

this case is materially indistinguishable from the one in Better

Business that this Court concluded had a substantial connection

with North Carolina. 1105 Media treated the North Carolina

operation as part of itself: it paid for the North Carolina office

rent and telephone and created 1105 Media thank you cards for

Wheeler to send to 1105 Media clients that identified "Embark

Events, a Division of 1105 Media, Inc." as having a North Carolina

address. As in Better Business, "jurisdiction here is based on

the benefits received by defendants from the underlying contract

which has a substantial connection with North Carolina." Id. at

501, 462 S.E.2d at 834.

Defendant attempts to distinguish Better Business on the

bases that (1) Embark was incorporated in Illinois and not North

Carolina; (2) no events were produced, performed, or contemplated

in North Carolina; and (3) no significant revenue was generated

from any operations of Embark Events. None of these purported

distinctions is material.
 -15-
Better Business focused not on the purchased business' state

of incorporation, but rather on the location of its offices and

where it did business. Id. at 500-01, 462 S.E.2d at 834. In this

case, after entering into the contract with Wheeler and Embark,

1105 Media established a division office in North Carolina and 75%

of Wheeler's services for 1105 Media were performed in North

Carolina. Compare id. ("After the purchase, Graphics Supply's

Winston-Salem office continued to do all of the administrative

work necessary to service the Winston-Salem operation, including

purchasing, shipping, bookkeeping, accounting, and accounts

receivable."). Where the events Wheeler arranged for Embark

actually took place -- as opposed to where Wheeler's services were

rendered -- is no more material than where the Better Business

clients were located or where their products where shipped.

Finally, although the Court noted in Better Business that the

defendants did financially benefit from the Winston-Salem office,

id. at 501, 462 S.E.2d at 834, the Court did not hold that a

generation of revenues was necessary. The focus was on "the

benefits received by defendants from the underlying contract."

Id. Here, those benefits were Wheeler's services, 75% of which

were rendered in North Carolina. Accordingly, under Better

Business, the trial court properly concluded that 1105 Media had

sufficient minimum contacts with respect to Wheeler's claims. See
 -16-
also Brickman v. Codella, 83 N.C. App. 377, 384, 350 S.E.2d 164,

168 (1986) (finding personal jurisdiction over non-resident

defendant where defendant's contacts with State "were

'purposefully directed' toward [plaintiff] in order to obtain his

financial assistance with a new business venture whereby

[defendant] sought personal commercial benefit" (emphasis added)).

Moreover, where the cause of action is a breach of contract,

the substantial performance of the contract by the plaintiff in

the forum state with the defendant's knowledge, permission, or

endorsement is a factor weighing in favor of a finding of specific

jurisdiction over the defendant. Here, 1105 Media employed Wheeler

as the head of a division of its company and marketed Wheeler and

Embark as part of the 1105 Media brand and operation. With 1105

Media's knowledge and, therefore, its permission, Wheeler

performed 75% of his duties under the contract from North Carolina.

See Chapman v. Janko, U.S.A., Inc., 120 N.C. App. 371, 373, 462

S.E.2d 534, 536 (1995) (finding jurisdiction over non-resident,

non-domesticated corporation in action for breach of contract for

consultation services by resident plaintiff where plaintiff

performed substantial services for corporation in North Carolina

and corporation listed plaintiff as a "'U.S.A. sales rep'" on its

own letterhead, even though employer had no employees residing in

North Carolina, only contacted plaintiff through telephone,
 -17-
letter, or outside North Carolina, and contacts involved

negotiations only); Dataflow Cos. v. Hutto, 114 N.C. App. 209,

213, 441 S.E.2d 580, 582-83 (1994) (finding personal jurisdiction

over out-of-state defendants for breach of contract where supplies

were shipped to defendants from plaintiff's North Carolina office,

plaintiff spent considerable time engineering and designing

computer system in North Carolina, and defendants sent payments to

North Carolina office).

However, 1105 Media vigorously argues that Wheeler was simply

a telecommuting employee and that this Court should adopt the

reasoning of other courts that have held that when a telecommuting

employee brings suit against his out-of-state employer in an action

related to the employment relationship, the employer's withholding

of state payroll taxes and payment of unemployment insurance to

the forum state, alone, is not enough to establish purposeful

availment or minimum contacts with that state. In support of this

argument, defendant cites Slepian v. Guerin, 172 F.3d 58, 1999 WL

109676, 1999 U.S. App. LEXIS 3371 (9th Cir. Mar. 1, 1999)

(unpublished).3

31105 Media also cites Waldron v. Atradius Collections, Inc.,
No. 1:10-cv-551, 2010 WL 2367392, 2010 U.S. Dist. LEXIS 145275 (D.
Md. June 9, 2010), another unpublished opinion. The district
court, however, declined to decide the question of personal
jurisdiction and instead simply transferred venue from Maryland to
Illinois. 2010 WL 2367392, at *3, 2010 U.S. Dist. LEXIS 145275,
at *9-*10.
 -18-
In Slepian, the Court, in considering a telecommuting

employee's lawsuit, held it did not have personal jurisdiction

over the defendant employer because the defendant's actions toward

the forum state amounted to nothing more than an "accommodation of

[the plaintiff's] choice of residence." 1999 WL 109676, at *2,

1999 U.S. App. LEXIS 3371, at *7. Here, however, the circumstances

do not involve a mere telecommuting employee and, therefore, we

need not consider whether North Carolina should adopt the Slepian

reasoning.

In this case, the trial court found that Wheeler did not

simply work from home, but rather worked out of his "1105 Media

office" in Mitchell County, North Carolina -- an office paid for

by 1105 Media and constituting a traditional work site of 1105

Media. See Wait v. Travelers Indem. Co. of Ill., 240 S.W.3d 220,

225 (Tenn. 2007) ("An employee telecommutes when he or she takes

advantage of electronic mail, internet, facsimile machines and

other technological advancements to work from home or a place other

than the traditional work site.").

More importantly, the trial court's findings establish that

1105 Media's actions were not merely an accommodation to Wheeler's

choice of residence, but rather a result of 1105 Media's own

initiative to create an operating division and office in North

Carolina in an ongoing and mutually beneficial business
 -19-
relationship. See Sheets v. Integrated Info. Util. Sys., Inc.,

No. CIV. 98-1328-KI, 1999 WL 417274, at *1, 1999 U.S. Dist. LEXIS

9719, at *2-*3 (D. Or. June 17, 1999) (declining to follow lower

court's recommendation in Slepian and finding jurisdiction over

out-of-state corporation in action for breach of employment

contract of telecommuter where employer initiated contact with

employee, and employee's residence in forum state was, at least in

part, for convenience of employer due to employer's financial

concerns and inability to pay for employee's relocation).

Defendant also argues that the trial court erred by failing

to make a finding as to which party initiated contact. While this

is a relevant factor to the minimum contacts analysis, our Supreme

Court has noted that "[n]o single factor controls, but they all

must be weighed in light of fundamental fairness and the

circumstances of the case." B. F. Goodrich Co. v. Tire King of

Greensboro, Inc., 80 N.C. App. 129, 132, 341 S.E.2d 65, 67 (1986).

Additionally, "Rule 52(a)(1) [of the Rules of Civil Procedure]

does not require the trial court to recite all of the evidentiary

facts; it is required only to find the ultimate facts, i.e., those

specific material facts which are determinative of the questions

involved in the action and from which an appellate court can

determine whether the findings are supported by the evidence and,

in turn, support the conclusions of law reached by the trial
 -20-
court." Mann Contractors, Inc. v. Flair with Goldsmith

Consultants-II, Inc., 135 N.C. App. 772, 774, 522 S.E.2d 118, 120-

21 (1999).

In this case, the fact that Wheeler sent out the first email

was not a determinative factor in the minimum contacts analysis.

The trial court made sufficient findings of 1105 Media's contacts

with the State to support its exercise of jurisdiction. The court

was not then required to make findings of fact on issues that would

not alter the conclusion. The trial court could reasonably

determine that the question of whom initiated the contact was not

material in light of the facts of this case, where the parties

engaged in a balanced negotiation, the ultimate structure of their

business relationship was proposed by 1105 Media, and 1105 Media

entered into a contract with the North Carolina plaintiffs

knowingly, voluntarily, and for their own economic benefit. We,

therefore, hold that the trial court did not err in concluding

that 1105 Media had purposeful minimum contacts with North

Carolina.

Once a court finds that a defendant has established minimum

contacts with the forum State, it must consider those contacts in

light of (1) the interests of North Carolina and (2) the

convenience of the forum to the parties. We note, however, that

"once the first prong of purposeful minimum contacts is satisfied,
 -21-
the defendant will bear a heavy burden in escaping the exercise of

jurisdiction based on other factors." Banc of Am. Secs., 169 N.C.

App. at 701, 611 S.E.2d at 187.

With respect to North Carolina's interest, "[i]t is generally

conceded that a state has a 'manifest interest' in providing its

residents with a convenient forum for redressing injuries

inflicted by out-of-state actors." Tom Togs, 318 N.C. at 367, 348

S.E.2d at 787. Here, Wheeler, a resident of North Carolina, has

been injured by 1105 Media's alleged breach of contract, the

damaging effect of which is felt in this State. See Ciba-Geigy

Corp. v. Barnett, 76 N.C. App. 605, 609, 334 S.E.2d 91, 94 (1985)

(finding that damaging effect of tort felt in North Carolina was

a factor supporting exercise of jurisdiction).

As for the convenience of the parties, litigating in North

Carolina would not be convenient for 1105 Media, but, by the same

token, litigation in another state would not be convenient for

Wheeler. The record does "not indicate that any one State would

be more convenient to all of the parties and witnesses than

another." Banc of Am. Secs., 169 N.C. App. at 700, 611 S.E.2d at

186. See Climatological Consulting Corp. v. Trattner, 105 N.C.

App. 669, 675, 414 S.E.2d 382, 385 (1992) (holding that although

three of defendant's material witnesses were located in

Washington, D.C., "this fact is counterbalanced by the fact that
 -22-
plaintiff's materials and offices are located here[,]" and "North

Carolina is a convenient forum to determine the rights of the

parties").

Finally, with respect to the fairness of this State's

exercising jurisdiction, "[i]t is well settled that a defendant

need not physically enter North Carolina in order for personal

jurisdiction to arise." Better Bus., 120 N.C. App. at 501, 462

S.E.2d at 834. Moreover, 1105 Media has not "pointed to any

disparity between plaintiff[s] and itself which might render the

exercise of personal jurisdiction over it unfair." Tom Togs, 318

N.C. at 368, 348 S.E.2d at 787.

We, therefore, hold that the contacts in this case rose to

the level satisfying the constitutional minimum under the Due

Process Clause necessary in order to justify the exercise of

personal jurisdiction over 1105 Media. Accordingly, we affirm the

trial court's order denying 1105 Media's motion to dismiss

Wheeler's claims.

II

Defendant next argues that the trial court erred in limiting

its ruling to Wheeler's claims and withholding ruling on 1105

Media's motion to dismiss with respect to Embark's claims.

Defendant points out that the jurisdictional analysis does not

consider a plaintiff's contacts with North Carolina, but rather
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"the relationship among the defendant, this State, and the cause

of action." Id. at 366, 348 S.E.2d at 786. It argues that, as a

result, the analysis as to Wheeler should apply equally to 1105

Media.

While under this reasoning, our holding in this opinion would

result in the conclusion that 1105 Media's motion to dismiss should

have been denied as to both plaintiffs, we do not agree with 1105

Media's analysis. The trial court did not defer ruling as to

jurisdiction over Embark's claims because of any confusion over

Embark's contacts with North Carolina, but rather because it was

unclear about the nature of Embark's cause of action. For specific

jurisdiction, the sole basis for personal jurisdiction in this

case, the focus is on "the relationship among the defendant, this

State, and the cause of action." Id. (emphasis added). Defendant

has not cited any authority suggesting that it was error for the

trial court to defer ruling when it had insufficient information

regarding the nature of Embark's cause of action. See also

Cambridge Homes of N.C., 194 N.C. App. at 412-13, 670 S.E.2d at

295-96 (holding that trial court, in determining minimum contacts,

should consider, among other factors, "'the source and connection

of the cause of action to the contacts'" (quoting Cooper, 140 N.C.

App. at 734, 537 S.E.2d at 858)).
 -24-
In federal court, deferral of a motion to dismiss for lack of

personal jurisdiction pending discovery is within the discretion

of the trial court. Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.

1989) ("If the existence of jurisdiction turns on disputed factual

questions, the court may resolve the challenge on the basis of a

separate evidentiary hearing, or may defer ruling pending receipt

at trial of evidence relevant to the jurisdictional question.").

This standard of review is consistent with this Court's holding

that a trial court may choose either to hear a motion to dismiss

for lack of minimum contacts based on affidavits or "'the court

may direct that the matter be heard wholly or partly on oral

testimony or depositions.'" Banc of Am. Secs., 169 N.C. App. at

694, 611 S.E.2d at 183 (quoting N.C.R. Civ. P. 43(e)).

Because the trial court was unable to determine based on the

affidavits and pleadings the precise nature of Embark's cause of

action, we cannot conclude that the trial court abused its

discretion in deciding that the motion to dismiss as to Embark

should be heard based on deposition testimony that more fully

fleshes out that cause of action. Consequently, we also affirm

the trial court's order to the extent that it defers ruling on the

motion to dismiss as to Embark's claims.

Affirmed.

Judges ROBERT C. HUNTER and McCULLOUGH concur.