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Title: Akh Company Inc. v. Morris Tire Serv.

April 19, 2012

TITLE: AKH COMPANY INC.
v.
MORRIS TIRE SERV., INC., ET AL.



The opinion of the court was delivered by: The Honorable David O. Carter, Judge

CIVIL MINUTES - GENERAL

Julie Barrera Not Present Courtroom Clerk Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

NONE PRESENT NONE PRESENT

PROCEEDING (IN CHAMBERS): ORDER STAYING RULING ON DEFAULT JUDGMENT AND REQUIRING EVIDENTIARY HEARING REGARDING THIS COURT'S PERSONAL JURISDICTION OVER DEFENDANT BRIAN MORRIS

Before the Court are three motions: (1) a Motion to Dismiss for Lack of Personal Jurisdiction filed by Defendant Brian Morris (Dkt. 29); (2) a Motion to Strike Defendant Brian Morris's Motion to Dismiss for Lack of Personal Jurisdiction brought by Plaintiff AKH Company, Inc. (Dkt. 33); and (3) a Motion for Default Judgment brought by Plaintiff AKH Company, Inc. against Defendant Morris Tire Service, Inc. Pl.'s Mot. for Default Judgment (Dkt. 27).

The Court has considered the moving, opposing, and replying papers, and hereby: (1) STAYS the Motion to Dismiss until an evidentiary hearing is held on June 25, 2012, at 1:30 p.m.; (2) DENIES the Motion to Strike; and (3) STAYS the Motion for Default Judgment until Plaintiff notifies this court that it has obtained a relief from stay in the bankruptcy case.*fn1

I. BACKGROUND

A. FACTS ALLEGED BY PLAINTIFF

Taken as true and in the light most favorable to Plaintiff, the facts alleged by AKH Co., Inc. ("Plaintiff") are as follows:

Plaintiff is a California corporation based in Orange County which is in the business of wholesaling tires. Compl. ¶¶ 4, 15. Defendant Morris Tire Service, Inc. ("Morris Tire") is a North Carolina corporation with its principal place of business in North Carolina; Morris Tire is in the business of retailing tires. Id. ¶ 5. Defendant Tracy Morris ("Tracy") is the "Secretary" of Morris Tire; she is a citizen of North Carolina. Id. ¶¶ 6, 13. Defendant Brian Morris ("Brian") is the "President" of Morris Tire; he is also a citizen of North Carolina. Id. ¶¶ 7, 12. Brian and Tracy are alleged to be the alter egos and co-equal owners of Morris Tire. Id. ¶¶ 9-11.

On May 5, 2008, Tracy, in her capacity as Secretary of Morris Tire, signed a "Credit Agreement" with Plaintiff. Id. ¶ 14. The Credit Agreement specified that "I hereby agree to pay [Plaintiff] in accordance with the terms and conditions as shown on the invoices."*fn2 Id.; see also Compl. Ex. A. Brian Morris is listed as the "President" of Morris Tire on the Credit Agreement; he and Tracy allegedly held themselves out as personally liable for the company's debts. Compl. ¶ 10; Compl. Ex.

Since that time, Plaintiff and Defendants had an ongoing business relationship whereby Plaintiff sold Defendants tires in exchange for payment as indicated on Plaintiff's invoices. Compl.¶ 15.

On July 28, 2011, Morris Tire ordered tires from Plaintiff; this order is reflected by an invoice dated August 2, 2011, for $126,736.36. See Pl.'s Opp'n to Brian Morris's Mot. To Dismiss ("Opp'n") (Dkt. 32) Ex. B. On August 26, 2011, Morris Tire again ordered tires from Plaintiff; this order is reflected by an invoice dated August 29, 2011, for $105,562.90. See id. Both of these invoices state: "Bill to: Brian K. Morris, Morris Tire Service, Inc., P.O. BOX 128, 734 SOUTH MAIN STREET, STAR NC 27356." See id. Plaintiff alleges that the tires were delivered as promised.

On November 4, 2011, Plaintiff sent Morris Tire a balance statement indicating that, based upon the invoices from August 2 & 29, Morris Tire owed Plaintiff $217,302.26. See Compl. ¶ 18; Compl. Ex. B. The account was listed as belonging to "Morris Tire Service" and the "Bill to" information was identical to that listed on the invoices. See id.

Morris Tire failed to pay Plaintiff any of the amounts due. Compl. ¶ 19. Plaintiff alleges that Morris Tire did not respond to its demands for payment until December 1, 2011. Id. ¶ 20. On that day, Plaintiff received an email, allegedly from Tracy, stating in its entirety: "I am out of the office today. I will be sending a check by Friday for a portion of what is owed. Sorry for the delay. Tracy Morris." Compl. ¶ 21; Compl. Ex. C. No payment was ever received by Plaintiff. Compl. ¶ 19.

Based on this course of conduct, Plaintiff seeks to recover $217,302.26 from Morris Tire, or to hold Brian and/or Tracy personally liable for the debt as the alter egos of Morris Tire.

B. BRIAN MORRIS'S POSITION

Brian contends that he is not subject to the personal jurisdiction of this Court because he is no longer involved in any capacity with Morris Tire and was not involved with the company at the time these disputed orders were placed. Brian Morris's Mot. to Dismiss (Dkt. 29) at 3. He makes this contention on the grounds that he and Tracy, formerly husband and wife and co-equal owners of Morris Tire, separated on November 30, 2010, and became legally divorced on March 28, 2011. See id.; id. at 6 ("Declaration of Brian Morris"). As a result of the divorce, as of March 28, 2011, Tracy allegedly became the sole owner and operator of Morris Tire and Brian ceased any and all affiliation with the

See id. In support of this contention, Brian presents a judicially noticeable "consent order" from a court in Montgomery County, North Carolina, "File No. 10 CVD 638," stating:

[Tracy] shall have sole ownership and possession of the business known as Morris Tire Services, Inc. . . . as well as all personally owned real estate, post office box and bank accounts and personal property associated with [Morris Tire], together with all accounts receivable as well as all debts associated with [Morris Tire].

Brian Morris's Mot. to Dismiss (Dkt. 29) Ex. 1. Additionally, the consent order states that Brian was not to "form a tire business," not to "work as an employee for any tire business," nor "transact any business with current or former customers of [Morris Tire]" ...


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