Leake v. AutoMoney

IN THE COURT OF APPEALS OF NORTH CAROLINA

2022-NCCOA-490

No. COA21-411

Filed 19 July 2022

Richmond County, No. 20 CVS 508

JENNIFER LEAKE and ELIZABETH WAKEMAN, Plaintiffs,

v.

AUTOMONEY, INC., Defendant.

Appeal by Defendant from order entered 15 January 2021 by Judge Dawn M.

Layton in Richmond County Superior Court. Heard in the Court of Appeals 8

February 2022.

Brown, Faucher, Peraldo & Benson PLLC, by James R. Faucher, for Plaintiffs-
Appellees.

Womble Bond Dickinson (US) LLP, by Michael Montecalvo and Scott D.
Anderson, for Defendant-Appellant.

WOOD, Judge.

¶1 AutoMoney, Inc. (“Defendant”) appeals from an order denying its motion to

dismiss under N.C. Gen. Stat. § 1A-1 Rules 12(b)(2) and 12(b)(6). On appeal,

Defendant argues the trial court erred by 1) not enforcing the choice of law provisions

within its loan agreements, and 2) determining minimum contacts existed to render

personal jurisdiction over it. Defendant petitions this Court by writ of certiorari to

review the trial court’s denial of its motion to dismiss under Rule 12(b)(6). In our
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Opinion of the Court

discretion, we grant Defendant’s writ of certiorari and affirm in part the trial court’s

order and reverse in part with respect to Elizabeth Wakeman’s (“Plaintiff Wakeman”)

claims.

I. Factual and Procedural Background

¶2 This dispute arises out of car title loan agreements Defendant made with

Jennifer Leake (“Plaintiff Leake”) and Elizabeth Wakeman (collectively, “Plaintiffs”).

Defendant is a South Carolina corporation with its principal place of business in

Charleston, South Carolina who provides car title loans, or loans secured by a motor

vehicle, to individuals. Plaintiffs are North Carolina residents.

¶3 In 2015, Plaintiff Leake contacted Defendant to inquire about a car title loan.

Plaintiff Leake “had heard about AutoMoney car title loans from a friend” and “called

AutoMoney from North Carolina.” Plaintiff Leake spoke with one of Defendant’s

employees who asked her “if . . . [she] had a car with a clear title[,] . . . [the] year,

make and model” of her car, and “how much money . . . [she] wanted to borrow.”

Plaintiff Leake was told to drive to Defendant’s store in South Carolina and to bring

her car, car title, proof of employment, and driver’s license to acquire the loan.

¶4 On August 7, 2015, Plaintiff Leake drove to Defendant’s Cheraw, South

Carolina office. There, she finalized and signed the loan agreement, presented her

vehicle for an appraisal and inspection, and received a loan for $815.00 at an interest

rate of 158.034%. Plaintiff Leake provided her vehicle as a security interest for the
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loan. Per the terms of Defendant’s loan agreement, a choice of law clause designated

South Carolina as the governing forum should a dispute arise:

This Loan Agreement, Promissory Note[,] and Security
Agreement is entered into by and between Lender/Secured
Party and Borrower/Debtor in the state of South Carolina
as of the above date, subject to the terms and conditions set
forth and any and all representations Borrower has made
to Lender in connection with this Loan Agreement,
Promissory Note and Security Agreement. As Lender is a
regulated South Carolina consumer finance company and
you, as Borrower, have entered into this Agreement in
South Carolina, this Agreement shall be interpreted,
construed, and governed by and under the laws of the State
of South Carolina, without regard to conflicts of law rules
and principles (whether of the State of South Carolina or
any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of South
Carolina.

Thereafter, Defendant utilized a third-party electronic title storage company to

record Plaintiff Leake’s loan with the North Carolina Department of Motor Vehicles.

¶5 Plaintiff Leake proceeded to make loan payments to Defendant over the phone

from North Carolina, where she resided. Ultimately, Plaintiff Leake stopped making

payments. Defendant thereafter repossessed Plaintiff Leake’s car from a location in

North Carolina and sold it.

¶6 On June 18, 2020, Plaintiffs filed an unverified complaint, arguing Defendant

violated N.C. Gen. Stat. §§ 53-165, 75-1.1, and 24-1.1. Plaintiffs then amended their

complaint and filed an unverified, amended complaint on June 29, 2020. On August
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3, 2020, Defendant filed a motion to dismiss pursuant to N.C. Gen. Stat. § 1A-1, Rules

12(b)(2), 12(b)(3), and 12(b)(6). Plaintiffs and Defendant then filed numerous

affidavits and exhibits with the trial court.

¶7 Linda Derbyshire (“Derbyshire”), Defendant’s owner and executive manager,

executed an affidavit stating the following: Defendant has no offices within North

Carolina, does not make car title loans in North Carolina, is not registered to do

business in North Carolina, does not have a representative agent in North Carolina,

does not have a mailing address or telephone number in North Carolina, and does not

directly market into North Carolina. Defendant only accepts loan applications in-

person at one of its South Carolina locations. Furthermore, Defendant’s customers

can pay their loans directly to Defendant by mail, by telephone, by debit card, online,

and through Western Union. Defendant sends customer service follow-ups,

regardless of the customer’s state of residency.

¶8 Defendant does have an internet site accessible by anyone, regardless of

residency. Interested borrowers may contact Defendant through its website to

inquire for more information about Defendant’s business. At least one of Defendant’s

advertisements appeals specifically to North Carolina residents, stating, inter alia,

[a]re you a North Carolina resident? We’ve got you
covered! You are just a short drive away from getting the
cash you need! Do you live in the Charlotte area? What
about . . . or Wilmington? How about Hendersonville,
Lumberton, Monroe, or Rockingham? There is a [sic] Auto
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Money Title Loans right across the border with a
professional and courteous staff ready to help you get the
cash you need. Is it worth the drive? Our thousands of
North Carolina customers would certainly say it is.

¶9 Additionally, a representative for Steals & Deals, a North Carolina publication

which primarily advertises in North Carolina counties along with four counties in

South Carolina, explained by way of affidavit that from February 2013 to May 2019,

Defendant ran a weekly advertisement in its publication. Affidavits from North

Carolina residents who borrowed money from Defendant further attested to

Defendant’s involvement in North Carolina, stating Defendant offered referral fees

in exchange for referring new North Carolina borrowers.

¶ 10 Notably, Plaintiff Wakeman did not file an affidavit nor any exhibits with the

trial court. Derbyshire’s affidavit attested she had “reviewed the records of loans

made by AutoMoney, Inc. . . . [and] ha[d] not found any evidence that AutoMoney,

Inc. made a loan to Elizabeth Wakeman.”

¶ 11 On November 30, 2020, Defendant’s motion to dismiss came on for hearing

before the trial court. By order entered January 15, 2021, the trial court denied

Defendant’s motion to dismiss. Therein, the trial court found it possessed personal

jurisdiction over Defendant and that “[t]he State of North Carolina has a strong

interest in the enforcement of its consumer protection law and in protecting its

citizens from what under North Carolina law are usurious loan rates.” Defendant
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gave timely notice of appeal. Defendant also petitions this court by a writ of certiorari

to review the trial court’s denial of its motion to dismiss under Rule 12(b)(6).1

II. Jurisdiction

¶ 12 Defendant appeals from the trial court’s denial of its motion to dismiss under

Rule 12(b)(2) and Rule 12(b)(6). “[T]he denial of a motion to dismiss is not

immediately appealable to this Court because it is interlocutory in nature.” Can Am

South, LLC v. State, 234 N.C. App. 119, 122, 759 S.E.2d 304, 307 (2014) (quoting Reid

v. Cole, 187 N.C. App. 261, 263, 652 S.E.2d 718, 719 (2007)). A party may not appeal

from “an interlocutory order or ruling of the trial judge unless such ruling or order

deprives the appellant of a substantial right which he would lose if the ruling or order

is not reviewed before final judgment.” North Carolina Consumers Power, Inc. v.

Duke Power Co., 285 N.C. 434, 437, 206 S.E.2d 178, 181 (1974) (citations omitted);

see also N.C. Gen. Stat. § 1-277 (2021). Therefore, since Defendant’s appeal from the

trial court’s order denying its motion to dismiss is interlocutory, we first determine

whether this appeal affects a substantial right.

¶ 13 Turning first to Defendant’s Rule 12(b)(2) motion, “motions to dismiss for lack

of personal jurisdiction affect a substantial right and are immediately appealable.”

1 On September 23, 2021, Plaintiffs filed a motion with this Court to dismiss
Defendant’s appeal pertaining to the trial court’s denial of its Rule 12(b)(6) motion.
Plaintiff also requested an expedited ruling. This motion was referred to this panel.
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A.R. Haire, Inc. v. St. Denis, 176 N.C. App. 255, 257-58, 625 S.E.2d 894, 898 (2006)

(citations omitted); see N.C. Gen. Stat. § 1-277(b) (“Any interested party shall have

the right of immediate appeal from an adverse ruling as to the jurisdiction of the

court over the person or property of the defendant . . . .”); Can Am South, LLC, 234

N.C. App. at 122, 759 S.E.2d at 307; State ex rel. Cooper v. Ridgeway Brands Mfg.,

LLC, 188 N.C. App. 302, 304, 655 S.E.2d 446, 448 (2008). Thus, Defendant’s appeal

from the order denying its Rule 12(b)(2) motion is properly before us on appeal.

¶ 14 Regarding Defendant’s Rule 12(b)(6) motion, Defendant petitions us by a writ

of certiorari to review the denial of its Rule 12(b)(6) motion. We have held “it is an

appropriate exercise of this Court’s discretion to issue a writ of certiorari in an

interlocutory appeal where there is merit to an appellant’s substantive arguments

and it is in the interests of justice to treat an appeal as a petition for writ of certiorari.”

Cryan v. Nat’l Council of YMCA of the United States, 280 N.C. App. 309, 2021-

NCCOA-612, ¶ 17 (cleaned up) (quoting Zaliagiris v. Zaliagiris, 164 N.C. App. 602,

606, 596 S.E.2d 285, 289 (2004)). Particularly, we have issued a writ of certiorari

when the issue in question is significant, important, and will promote judicial

economy. Id. at ¶ 18. The issue raised by Defendant’s motion to dismiss under Rule

12(b)(6) in the present case is significant as it raises the critical question of whether

our State legislation prohibiting predatory title lending constitutes a fundamental

public policy. Likewise, granting Defendant’s petition for writ of certiorari will
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promote judicial economy as this appeal represents one of thirty-two proceedings

against Defendant in North Carolina courts, seven of which are currently before this

Court. Therefore, in our discretion, we grant Defendant’s petition for writ of

certiorari to review its motion to dismiss under Rule 12(b)(6).

III. Discussion

¶ 15 Defendant raises several issues on appeal; each will be addressed in turn.

A. Personal Jurisdiction

¶ 16 Defendant first contends the trial court erred by denying its Rule 12(b)(2)

motion to dismiss. We disagree.

¶ 17 When reviewing the denial of a motion to dismiss for lack of jurisdiction, we

determine whether “the findings of fact by the trial court are supported by competent

evidence in the record . . . .” Lab. Corp. of Am. Holdings v. Caccuro, 212 N.C. App.

564, 567, 712 S.E.2d 696, 699 (2011) (quoting Banc of Am. Sec. LLC v. Evergreen Int’l

Aviation, Inc., 169 N.C. App. 690, 694, 611 S.E.2d 179, 183 (2005)). The trial court’s

conclusions of law are reviewed de novo. Id.; see Beroth Oil Co. v. N.C. DOT, 367 N.C.

333, 338, 757 S.E.2d 466, 471 (2014).

1. Competent Evidence

¶ 18 As an initial matter, Defendant first challenges the trial court’s findings of fact

as they relate to personal jurisdiction. Specifically, Defendant challenges the trial

court’s findings regarding 1) pre-lending phone calls, 2) contact initiation with North
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Carolina residents, 3) receipt of loan payments, 4) perfection of car titles, and 5)

contract formation. Looking first to the order’s findings of fact regarding the pre-

lending phone calls, contact initiation with North Carolina residents, and contract

formation, the trial court made the following relevant findings of fact:

4. Defendant engages in telephone discussion[s] regarding
[t]he details of its loan products with potential customers
while those customers are in North Carolina.

5. Defendant calls potential borrowers who are located in
North Carolina.

6. Defendant accepts online inquiries from North Carolina
and then makes sales calls to North Carolina to the persons
who submitted their contact information to Defendant.

7. Defendant offers loans over the phone to North
Carolinians and Defendant receives acceptances of its loan
offers by telephone from North Carolinians.

8. Defendant provides information about its loans over the
phone to North Carolinians and makes inquiries
concerning amounts sought to be borrowed.

9. Defendant directs North Carolina residents to travel out
of state to its stores.

10. Defendant tells North Carolina borrowers what
documents to bring to take out loans.

11. Defendant tells North Carolina borrowers to bring an
extra key to the vehicle.

...

15. Defendant sends written solicitations into North
Carolina.
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¶ 19 A careful review of the affidavits filed by the North Carolina residents reveals

competent evidence exists to support the trial court’s findings of fact. These affidavits

further reveal Defendant discussed the loan amounts and details of their loan

security interests over the phone. Moreover, at deposition, Derbyshire admitted

Defendant discussed its loan products over the phone. Thus, competent evidence

exists to support findings of fact numbers 4 to 11 and 15.

¶ 20 Turning next to the trial court’s findings of fact regarding Defendant’s receipt

of loan payments and payment of car title loans from North Carolina residents, the

trial court made the following relevant findings of fact.

12. Defendant perfects security interests using the North
Carolina Division of Motor Vehicles.

13. Defendant accepts payments from North Carolina.

...

16. Defendant sends collection letters into North Carolina.

17. Defendant makes collections calls into North Carolina.

18. Defendant directs others to enter North Carolina to
take possession of collateral motor vehicles.

¶ 21 After a careful review of the record, we conclude competent evidence exists to

support these findings of fact. Derbyshire, in her affidavit, admitted Defendant

perfects its security interest in the “appropriate state’s department of motor vehicles

. . . .” Hayes, owner of Associates Asset Recovery, LLC, attested that his company
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has “recovered 442 motor vehicles for AutoMoney, Inc. in North Carolina.” The North

Carolina borrowers, in their affidavits, stated Defendant made collection calls into

North Carolina, accepted payments from North Carolina, mailed written solicitation

letters into North Carolina, and mailed collection letters into North Carolina.

Therefore, we hold competent evidence exists to support findings of fact numbers 12,

13, and 16 to 18.

2. Conclusions of Law

¶ 22 Defendant next argues the trial court erred by concluding minimum contacts

existed between it and North Carolina. We disagree.

¶ 23 This Court utilizes a two-step analysis to determine whether personal

jurisdiction exists over a non-resident defendant: “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.” Banc of Am. Sec. LLC, 169 N.C. App. at 693, 611

S.E.2d at 182 (cleaned up) (citing Tom Togs, Inc. v. Ben Elias Industries Corp., 318

N.C. 361, 364, 348 S.E.2d 782, 785 (1986)); see Lab. Corp. of Am. Holdings, 212 N.C.

App. at 566, 712 S.E.2d at 699. But see Tom Togs, Inc., 318 N.C. at 365, 348 S.E.2d

at 785 (“We have also held in considering N.C.G.S. § 1-75.4 that the requirements of

due process, not the words of the long-arm statute, are the ultimate test of jurisdiction

over a non-resident defendant[] . . . .”). Because Defendant does not challenge on
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appeal the applicability of our long-arm statute, we confine our analysis to whether

the trial court’s conclusion it had personal jurisdiction over Defendant violated the

requirements of due process.

¶ 24 The Due Process Clause of the Fourteenth Amendment to the United States

Constitution “prevents states from rendering valid judgments against nonresidents.”

In re F.S.T.Y., 374 N.C. 532, 534, 843 S.E.2d 160, 162 (2020) (citing World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S. Ct. 559, 564, 62 L. Ed. 2d

490, 497 (1980)). A defendant must “be given adequate notice of the suit . . . and be

subject to the personal jurisdiction of the court[] . . . .” World-Wide Volkswagen Corp.,

444 U.S. at 291, 100 S. Ct. 564, 62 L. Ed. 2d at 497 (citations omitted); accord In re

F.S.T.Y., 374 N.C. at 534, 843 S.E.2d at 162.

¶ 25 Under the due process clause, minimum contacts must exist between the forum

state and nonresident such that “the maintenance of the suit does not offend

traditional notions of fair play and substantial justice.” Tom Togs, Inc., 318 N.C. at

365, 348 S.E.2d at 786 (cleaned up) (quoting Int’l Shoe Co. v. Wash., 326 U.S. 310,

316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945)). In other words, “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[] . . . .” Tom Togs, Inc., 318 N.C. at 365, 348 S.E.2d at 786; see also World-Wide

Volkswagen Corp., 444 U.S. at 297, 100 S. Ct. at 567, 62 L. Ed. 2d at 501 (“[I]t is that
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the defendant’s conduct and connection with the forum State are such that he should

reasonably anticipate being haled into court there.”); Cherry Bekaert & Holland v.

Brown, 99 N.C. App. 626, 632, 394 S.E.2d 651, 655 (1990). However, “our minimum

contacts analysis looks to the defendant’s contacts with the forum State itself, not the

defendant’s contacts with persons who reside there.” Walden v. Fiore, 571 U.S. 277,

285, 134 S. Ct. 1115, 1122, 188 L. Ed. 2d 12, 20 (2014) (internal quotation marks

omitted).

¶ 26 There are two types of personal jurisdiction recognized by our Supreme Court

sufficient for establishing minimum contacts: general and specific jurisdiction. Beem

USA Limited-Liability Ltd. P’ship v. Grax Consulting, LLC, 373 N.C. 297, 303, 838

S.E.2d 158, 162 (2020). “General jurisdiction is applicable in cases where the

defendant’s affiliations with the State are so continuous and systematic as to render

them essentially at home in the forum State.” Id. (internal quotations marks omitted)

(quotation omitted); see also Lab. Corp. of Am. Holdings, 212 N.C. App. at 569, 712

S.E.2d at 701 (“General jurisdiction may be asserted over a defendant even if the

cause of action is unrelated to defendant’s activities in the forum as long as there are

sufficient continuous and systematic contacts between defendant and the forum

state.” (internal quotation marks omitted)). Specific jurisdiction exists when “the

controversy arises out of the defendant’s contacts with the forum state . . . .” Tom

Togs, Inc., 318 N.C. at 366, 348 S.E.2d at 786; see Beem USA Limited-Liability Ltd.
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P’ship, 373 N.C. at 303-04, 838 S.E.2d at 162.

¶ 27 In the case sub judice, Plaintiffs assert Defendant is subject to a suit in North

Carolina under specific jurisdiction. As such, we limit our analysis to whether this

State has specific jurisdiction over Defendant.

¶ 28 A specific jurisdiction inquiry analyzes “the relationship among the defendant,

the forum state, and the cause of action . . . .” Tom Togs, Inc., 318 N.C. at 366, 348

S.E.2d at 786; see Banc of Am. Sec. LLC, 169 N.C. App. at 696, 611 S.E.2d at 184.

“For a State to exercise jurisdiction consistent with due process, the defendant’s suit-

related conduct must create a substantial connection with the forum State.” Walden,

571 U.S. at 284, 134 S. Ct. at 1121, 188 L. Ed. 2d at 20. This Court has established

several factors to consider when evaluating whether minimum contacts exist: “(1) the

quantity of the contacts; (2) the nature and quality of the contacts; (3) the source and

connection of the cause of action with those contacts; (4) the interest of the forum

state; and (5) the convenience to the parties.” A.R. Haire, Inc. v. St. Denis, 176 N.C.

App. 255, 260, 625 S.E.2d 894, 899 (2006) (citation omitted); see Sherlock v. Sherlock,

143 N.C. App. 300, 304, 545 S.E.2d 757, 761 (2001); Bruggerman, 138 N.C. App. at

617, 532 S.E.2d at 219; Cherry Bekaert & Holland, 99 N.C. App. at 632, 394 S.E.2d

at 655.

¶ 29 The evidence presented in this present case shows Defendant’s conduct created

a substantial connection with North Carolina. Defendant contacted North Carolina
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residents through the following methods: 1) online advertisements; 2) advertisements

in Steals & Deals, a local North Carolina publication; 3) telephone calls between

Defendant and North Carolina residents while the residents were in North Carolina;

4) perfection of its security interest with North Carolina Department of Motor

Vehicles; 5) offers of referral bonuses to North Carolina residents for referring new

North Carolina customers; 6) receipt of loan payments from North Carolina residents

within North Carolina; and 7) repossession of vehicles located within North Carolina.

¶ 30 Regarding Defendant’s online advertisements, the trial court found in finding

of fact number 1, “Defendant has advertised its loans in North Carolina.” This court

in Havey v. Valentine outlined the following tests to determine whether an Internet

website warrants the exercise of personal jurisdiction:

[A] State may, consistent with due process, exercise
judicial power over a person outside of the State when that
person (1) directs electronic activity into the State, (2) with
the manifested intent of engaging in business or other
interactions within the State, and (3) that activity creates,
in a person within the State, a potential cause of action
cognizable in the State’s courts.

Havey v. Valentine,172 N.C. App. 812, 816-17, 616 S.E.2d 642, 647-48 (2005).

Notably, at least one of Defendant’s internet advertisements directly targeted North

Carolina:

Are you a North Carolina resident? We’ve got you covered!
You are just a short drive away from getting the cash you
need! Do you live in the Charlotte area? What about . . .
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or Wilmington? How about Hendersonville, Lumberton,
Monroe, or Rockingham? There is a [sic] Auto Money Title
Loans right across the border with a professional and
courteous staff ready to help you get the cash you need. Is
it worth the drive? Our thousands of North Carolina
customers would certainly say it is.

This advertisement is clearly a “manifested intent” to engage in business within

North Carolina by recruiting our residents and providing them with information on

how to acquire loans. Defendant’s high interest car title loans would be void as a

matter of public policy if offered by a company within North Carolina. Because

Defendant attempts to circumvent North Carolina’s predatory lending laws by

operating from South Carolina while directly marketing to North Carolina residents,

Defendant’s internet advertisements satisfy the test for personal jurisdiction over

internet communications stated in Havey.

¶ 31 Moreover, Defendant ran an advertisement in a North Carolina publication for

six consecutive years. Although running an advertisement in a national publication

is not sufficient, standing alone, to establish personal jurisdiction, this Court has yet

to address whether advertisements in a local publication can give rise to personal

jurisdiction. See Stallings v. Hahn, 99 N.C. App. 213, 216, 392 S.E.2d 632, 634 (1990);

Marion v. Long, 72 N.C. App. 585, 587, 325 S.E.2d 300, 303 (1985). Certainly, placing

an advertisement in a publication which primarily circulates in a single state is

sufficient for a defendant to reasonably anticipate being haled into that State’s court.
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See World-Wide Volkswagen Corp., 444 U.S. at 297, 100 S. Ct. at 567, 62 L. Ed. 2d at

501.

¶ 32 Additionally, Defendant offered North Carolina borrowers a referral bonus if

they referred new North Carolina residents for a car title loan. Likewise, Defendant

entered North Carolina through third parties to repossess North Carolina borrowers’

vehicles once borrowers fell behind on their payments.

¶ 33 Because Defendant had direct contact with North Carolina through its

business operations, internet advertisements, and local publication advertisements,

Defendant purposefully “avail[ed] [it]self of the privilege of conducting activities

within” North Carolina. Tom Togs, Inc., 318 N.C. at 365, 348 S.E.2d at 786 (citation

omitted). In other words, the sum and quality of Defendant’s contacts with this State,

paired with Defendant’s obvious intent to recruit North Carolina clients, is sufficient

to establish personal jurisdiction. Accordingly, we hold the trial court did not err by

denying Defendant’s Rule 12(b)(2) motion to dismiss.

B. Rule 12(b)(6) Motion

¶ 34 Defendant next asserts the trial court erred by denying its motion to dismiss

under Rule 12(b)(6). After a careful review of the record and applicable law, we

conclude the trial court committed no error.

¶ 35 We review a trial court’s ruling on a motion to dismiss under Rule 12(b)(6) de

novo. Leary v. N.C. Forest Prods., Inc., 157 N.C. App. 396, 400, 580 S.E.2d 1, 4 (2003),
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aff’d per curiam, 357 N.C. 567, 597 S.E.2d 673-74 (2003); see Grich v. Mantelco, LLC,

228 N.C. App. 587, 589, 746 S.E.2d 316, 318 (2013). A Rule 12(b)(6) motion to dismiss

“tests the legal sufficiency of the complaint.” Stanback v. Stanback, 297 N.C. 181,

185, 254 S.E.2d 611, 615 (1979) (citing Sutton v. Duke, 277 N.C. 94, 176 S.E.2d 161

(1970)). When “ruling on . . . [a Rule 12(b)(6)] motion the allegations of the complaint

must be viewed as admitted, and on that basis the court must determine as a matter

of law whether the allegations state a claim for which relief may be granted.”

Stanback, 297 N.C. at 185, 254 S.E.2d at 615 (citing Newton v. Standard Fire Ins.

Co., 291 N.C. 105, 229 S.E.2d 297 (1976)); see Sutton, 277 N.C. at 103, 176 S.E.2d at

166 (“[A] complaint should not be dismissed for insufficiency unless it appears to a

certainty that plaintiff is entitled to no relief under any state of facts which could be

proved in support of the claim.” (emphasis omitted)); Conley v. Gibson, 355 U.S. 41,

45-46, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80, 84 (1957), abrogated by Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).

¶ 36 Here, Defendant argues the trial court should have granted its Rule 12(b)(6)

motion because of the South Carolina choice of law provision within its loan

agreement mandating the application of South Carolina law and, thus, precluding

Plaintiff’s claims arising from North Carolina law. As a general rule, a “court

interprets a contract according to the intent of the parties to the contract.” Cable Tel

Servs. v. Overland Contr., 154 N.C. App. 639, 642, 574 S.E.2d 31, 33 (2002) (citing
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Bueltel v. Lumber Mut. Ins. Co., 134 N.C. App. 626, 631, 518 S.E.2d 205, 209 (1999));

see Duke Power Co. v. Blue Ridge Electric Membership Corp., 253 N.C. 596, 602, 117

S.E.2d 812, 816 (1961). However, the intent of the parties must not “require the

performance of an act prohibited by law.” Duke Power Co., 253 N.C. at 602, 117

S.E.2d at 816. When “parties to a contract have agreed that a given jurisdiction’s

substantive law shall govern the interpretation of the contract, such a contractual

provision will be given effect.” Tanglewood Land Co. v. Byrd, 299 N.C. 260, 262, 261

S.E.2d 655, 656 (1980) (first citing Bundy v. Commercial Credit Co., 200 N.C. 511,

516, 157 S.E. 860, 863 (1931); then citing Fast v. Gulley, 271 N.C. 208, 155 S.E.2d 507

(1967)); see Bueltel, 134 N.C. App. at 631, 518 S.E.2d at 209 (“[I]t is apparent that

when a choice of law provision is included in a contract, the parties intend to make

an exception to the presumptive rule that the contract is governed by the law of the

place where it was made.”). A choice of law provision is binding “on the interpreting

court as long as they had a reasonable basis for their choice and the law of the chosen

State does not violate a fundamental public policy of the state or otherwise applicable

law.” Torres v. McClain, 140 N.C. App. 238, 241, 535 S.E.2d 623, 625 (2000) (quoting

Behr v. Behr, 46 N.C. App. 694, 696, 266 S.E.2d 393, 395 (1980)); see also Tanglewood

Land Company, 299 N.C. at 262, 261 S.E.2d at 656.

¶ 37 Here, Plaintiffs assert that regardless of the choice of law provision, Defendant

is subject to North Carolina law under N.C. Gen. Stat. § 53-190. As such, we must
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determine whether N.C. Gen. Stat. § 53-190 constitutes a “fundamental public policy”

or “otherwise applicable law” as to invalidate Defendant’s choice of law provision. See

Torres, 140 N.C. App. at 241, 535 S.E.2d at 625.

1. N.C. Gen. Stat. § 53-190 is a Fundamental Public Policy

¶ 38 N.C. Gen. Stat. § 53-190 states:

(a) No loan contract made outside this State in the amount
or of the value of fifteen thousand dollars ($15,000) or less,
for which greater consideration or charges than are
authorized by . . . [N.C. Gen. Stat. §§] 53-173 and . . . 53-
176 of this Article have been charged, contracted for, or
received, shall be enforced in this State. Provided, the
foregoing shall not apply to loan contracts in which all
contractual activities, including solicitation, discussion,
negotiation, offer, acceptance, signing of documents, and
delivery and receipt of funds, occur entirely outside North
Carolina.

(b) If any lender or agent of a lender who makes loan
contracts outside this State in the amount or of the value
of fifteen thousand dollars ($15,000) or less, comes into this
State to solicit or otherwise conduct activities in regard to
such loan contracts, then such lender shall be subject to the
requirements of this Article.

(c) No lender licensed to do business under this Article may
collect, or cause to be collected, any loan made by a lender
in another state to a borrower, who was a legal resident of
North Carolina at the time the loan was made. The
purchase of a loan account shall not alter this prohibition.

N.C. Gen. Stat. § 53-190 (2021). In other words, N.C. Gen. Stat. § 53-190 aims to

protect North Carolina residents from predatory lending by nonresident, predatory

loan corporations that infiltrate North Carolina through the contractual activities
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listed above.

¶ 39 This Court has yet to address whether N.C. Gen. Stat. § 53-190 encompasses

a fundamental public policy of North Carolina. In making today’s determination, we

are guided by our case law concerning predatory lending. In State ex rel. Cooper v.

NCCS Loans, Inc., defendant offered immediate cash advances under the guise of an

internet store wherein the customer was required to sign a year-long contract for

“internet access.” State ex rel. Cooper v. NCCS Loans, Inc., 174 N.C. App. 630, 635-

36, 624 S.E.2d 371, 375 (2005). The customers were charged “100 times more” for

internet access compared to legitimate internet providers and a high interest rate on

the cash advanced. Id. at 637-38, 624 S.E.2d at 376-77. The trial court granted

summary judgment against defendants for usury, violation of the North Carolina

Consumer Finance act, and unfair and deceptive trade practices. Id. at 633, 624

S.E.2d at 373-74. On appeal, defendant challenged, among other things, the trial

court’s entry of summary judgment on plaintiff’s claim of unfair and deceptive trade

practices. Id., 174 N.C. App. at 640, 624 S.E.2d at 378. We agreed with the trial

court, stating “it is a ‘paramount public policy of North Carolina to protect North

Carolina resident borrowers through the application of North Carolina interest laws.’

” Id. at 641, 624 S.E.2d at 378; see N.C. Gen. Stat. § 24-2.1(g) (2021); Odell v. Legal

Bucks, LLC, 192 N.C. App. 298, 319, 665 S.E.2d 767, 780 (2008).

¶ 40 Moreover, a review of North Carolina’s General Assembly’s legislative action
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regarding predatory lending within our State further guides our decision. On

December 20, 2006, our Supreme Court in Skinner v. Preferred Credit, addressed

whether North Carolina had personal jurisdiction over the 1997-1 Trust, a

nonresident defendant who held high interest loans. Skinner v. Preferred Credit, 361

N.C. 114, 119, 638 S.E.2d 203, 208 (2006). In a 4 to 3 decision, Justice Paul Newby

writing for the majority concluded “North Carolina courts lack personal jurisdiction

over a nonresident trust that has no connections to this state other than holding

mortgage loans secured by deeds of trust on North Carolina property.” Id. at 127,

638 S.E.2d at 213. Justice Timmons-Goodson strongly dissented, writing the “Court’s

decision today aids in the exploitation of our state’s most vulnerable citizens[,]” and

“the majority’s decision effectively undermines the right of unwitting victims of

predatory lending practices . . . .” Id. at 127, 638 S.E.2d at 213 (Timmons-Goodson,

J., dissenting).

¶ 41 Less than four months after the decision in Skinner, our General Assembly

enacted House Bill 1374 overturning the Skinner case. The bill was entitled “An Act

to Overturn the Shepard Case and Amend the Limitation Regarding Actions to

Recover for Usury; To Overturn The Skinner Case And Amend The Long-Arm Statute

To Allow North Carolina Courts to Exercise Personal Jurisdiction Over Certain

Nonresident Defendants; To Require That a Notice of Foreclosure Contain Certain

Information; And to Provide for Mortgage Debt Collection and Servicing.” 2007 NC
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Session Laws, House Bill 1374 (emphasis added). In addition to House Bill 1374, our

general assembly proceeded to pass four other bills addressing consumer mortgage

lending in the summer of 2007. Susan E. Hauser, Predatory Lending, Passive

Judicial Activism, and the Duty to Decide, 86 N.C.L. Rev. 1501, 1555 (2008).

¶ 42 Based on our General Assembly’s legislation prohibiting predatory lending, its

swift response to Skinner, and our case law governing predatory lending practices

within the State of North Carolina, the issue of predatory lending is clearly a question

of fundamental public policy for this State. Thus, since N.C. Gen. Stat. § 53-190

protects North Carolina citizens from predatory lending and our conclusion it

constitutes a fundamental public policy of this State, we next determine whether

Defendant violated this statute.

¶ 43 In pertinent part, N.C. Gen. Stat. § 53-190 prohibits predatory loans made

elsewhere unless “all contractual activities, including solicitation, discussion,

negotiation, offer, acceptance, signing of documents, and delivery and receipt of

funds, occur entirely outside North Carolina.” § 53-190(a). “Negotiation” is defined

as “deliberation, discussion, or conference upon the terms of a proposed agreement,

or as the act of settling or arranging the terms of a bargain or sale.” Cooper v.

Henderson, 55 N.C. App. 234, 235, 284 S.E.2d 756, 757 (1981) (citation omitted).

“Discussion” is defined as “[t]he act of exchanging views on something; a debate.”

Discussion, Black’s Law Dictionary (10th ed. 2014).
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¶ 44 Here, Defendant negotiated and discussed the terms of the loan agreement

with North Carolina residents while they were in North Carolina. Plaintiff Leake, in

her deposition, recounted the following:

I called AutoMoney from North Carolina. . . . The
AutoMoney employee I spoke with asked me if I had a car
with a clear title. I told them I did and they asked me for
information about my car like year, make[,] and model. . . .
The AutoMoney employee next asked me how much money
I wanted to borrow. I told them $1000.00.

Per Plaintiff Leake’s affidavit, Defendant discussed details of the loan amount and

the security interest for the loan with her. Furthermore, Derbyshire, in her

deposition, stated Defendant would provide information about its business to

potential borrowers who contacted Defendant. Because Defendant’s business was

providing high interest loans, these details would naturally be included in

“information about its business.”

¶ 45 By discussing its business and the terms of its contract over the phone with

North Carolina residents, Defendant discussed and negotiated loans within North

Carolina as defined by N.C. Gen. Stat. § 53-190. Therefore, we conclude Defendant

violated N.C. Gen. Stat. § 53-190 and, in turn, violated a fundamental public policy

of North Carolina. As such, we hold the choice of law provision within Defendant’s

loan agreements is void as a matter of public policy and the trial court properly denied

Defendant’s Rule 12(b)(6) motion.
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C. Plaintiff Wakeman

¶ 46 Finally, Defendant alleges the trial court erred by not dismissing Plaintiff

Wakeman from this action due to a lack of personal jurisdiction. Additionally,

Defendant challenges findings of fact numbers 28 and 29, arguing they are not

supported by competent evidence. Finding of fact number 28 provides, “Plaintiff

Elizabeth Wakeman is not a resident of Richmond County but is a resident of North

Carolina[]”; finding of fact number 29 states, “Ms. Wakeman went to an AutoMoney

store in South Carolina and exchanged Defendant’s loan check for her North Carolina

car title.”

¶ 47 When a finding of fact is challenged, we look to see whether competent evidence

supports the finding of fact. Lab. Corp. of Am. Holdings, 212 N.C. App. at 567, 712

S.E.2d at 699. Here, Plaintiffs’ unverified, amended complaint frequently stated

“each Plaintiff” thereby implicating both Plaintiff Leake and Plaintiff Wakeman. The

complaint, however, did not specifically mention Plaintiff Wakeman. Although 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 “unverified allegations in the complaint meet

plaintiff’s initial burden of proving the existence of jurisdiction and defendants do not

contradict plaintiff’s allegations in their sworn affidavit, such allegations are

accepted as true and deemed controlling.” Berrier v. Carefusion 203, Inc., 231 N.C.

App. 516, 521, 753 S.E.2d 157, 162 (2014) (cleaned up) (quoting Inspirational
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Network, Inc. v. Combs, 131 N.C. App. 231, 235, 506 S.E.2d 754, 758 (1998)).

¶ 48 Other than Plaintiffs’ unverified complaint, the only other source of evidence

concerning Plaintiff Wakeman is the sworn affidavit of Derbyshire. In her affidavit,

Derbyshire stated, “I have reviewed the records of loans made by AutoMoney, Inc. I

have not found any evidence that AutoMoney, Inc. made a loan to Elizabeth

Wakeman.” When, as in this case, a defendant submits some form of evidence to

counter a plaintiff’s unverified claims, the plaintiff may not rest upon these claims

but must file “some form of evidence in the record [to] support[] the exercise of

personal jurisdiction.” Bruggeman v. Meditrust Acquisition Co., 138 N.C. App. 612,

615-16, 532 S.E.2d 215, 218 (2000); see Brown v. Refuel Am., Inc., 186 N.C. App. 631,

634, 652 S.E.2d 389, 392 (2007). Indeed, “the plaintiff’s burden of establishing prima

facie that grounds for personal jurisdiction exist can still be satisfied if some form of

evidence in the record supports the exercise of personal jurisdiction.” Bruggeman,

138 N.C. App. at 616, 532 S.E.2d at 218 (citation omitted).

¶ 49 Here, Plaintiffs did not file an affidavit or any other evidence with the trial

court to support the exercise of jurisdiction. Accordingly, because Derbyshire’s

affidavit contradicts Plaintiffs’ unverified, amended complaint, we hold finding of fact

number 29 is not supported by competent evidence. Notwithstanding, Derbyshire’s

affidavit did not address whether Plaintiff Wakeman is a resident of North Carolina;

as such, we hold finding of fact number 28 is supported by competent evidence.
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¶ 50 Thus, the only finding of fact supporting the trial court’s exercise of personal

jurisdiction over Plaintiff Wakeman is that she is a citizen of North Carolina. The

mere fact Plaintiff Wakeman is a citizen of North Carolina is insufficient to establish

specific jurisdiction. See Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773,

1781, 198 L. Ed. 2d 395, 404 (2017) (“For specific jurisdiction, a defendant’s general

connections with the forum are not enough.”). There is no evidence within the record

to show Plaintiff Wakeman interacted with Defendant, received a loan from

Defendant, or contacted Defendant in any manner. Although Plaintiff Leake was in

contact with Defendant, entered into a loan agreement with Defendant, and had her

car repossessed by Defendant, Plaintiff Leake’s interactions with Defendant “does not

allow the State to assert specific jurisdiction over” Plaintiff Wakeman’s claims. Id.

at 1781, 198 L. Ed. 2d at 405 (“As we have explained, a defendant’s relationship with

a third party, standing alone, is an insufficient basis for jurisdiction.” (cleaned up)).

Therefore, notwithstanding our holding today that personal jurisdiction exists over

Plaintiff Leake’s claims, we hold the trial court did not have personal jurisdiction over

Plaintiff Wakeman’s claims. As such the trial court erred by allowing Plaintiff

Wakeman’s claims to proceed.

IV. Conclusion

¶ 51 For the foregoing reasons, Defendant is subject to personal jurisdiction in

North Carolina. Furthermore, Defendant’s actions violated N.C. Gen. Stat. § 53-190;
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thus, the trial court did not err by denying Defendant’s motion to dismiss under Rule

12(b)(6). However, the trial court does not have jurisdiction over Defendant regarding

Plaintiff Wakeman’s claims. The order of the trial court is affirmed in all respects

except for Plaintiff Wakeman’s claims, and thus the portion of the order pertaining

to Plaintiff Wakeman is reversed.

AFFIRMED IN PART; REVERSED IN PART.

Judges HAMPSON and GORE concur.