Where the Business Court determined that Defendant had not been properly served with the original complaint, personal jurisdiction could nonetheless be established where Defendant made a general appearance in the case post-judgment. Slattery v AppyCity, LLC, 2022 NCBC 8 (J. Robinson). As a result, because Defendant’s Motion to Claim Exemptions (filed post-judgment) constituted a general appearance in the case (her first), the Court could properly exercise jurisdiction over Defendant from the case’s commencement and the default judgment would not be set aside.
Plaintiff filed suit against a number of individuals, including Defendant Barber, contending that he had been fraudulent induced to invest hundreds of thousands of dollars into AppyCity, an alleged sham technology company. When none of the defendants filed an answer, Plaintiff obtained an entry of default and, pursuant to a motion for summary judgment, a default judgment of nearly $2 million against all defendants. Plaintiff thereafter served a Notice of Rights to Claim Exemptions on Defendant Barber, who subsequently filed a Motion to Claim Exemptions. Plaintiff objected to Defendant’s Motion. Defendant then filed a Motion to Set Aside the Default Judgment and Entry of Default, contending she had never properly been served. Plaintiff responded, contending that even if Defendant had not properly been served with the original complaint, her filing of a Motion to Claim Exemptions constituted a general appearance in the case and therefore waived any earlier defect.
The Business Court agreed. After finding Plaintiff’s efforts to serve Defendant via Federal Express failed to sufficiently prove Defendant had been properly served with the original complaint (Opinion, ¶24), the Business Court nonetheless held that Defendant’s Motion to Claim Exemptions constituted a “general appearance” in the case which—according to Court of Appeals’ precedent—thereby permitted the Business Court to exercise personal jurisdiction over her from the beginning of the case. (Id., ¶33). Recognizing that a split of authority existed between two North Carolina Court of Appeals’ decisions on the topic, the Business Court followed the earlier decision and denied Defendant’s motion to set aside entry of default and the default judgment. (Id., ¶55).