Harold Lang Jewelers, Inc. v. Johnson - 156 N.C. App. 187, 576 S.E.2d 360 (2003)

Rule:

Pursuant to N.C. Gen. Stat. § 55-15-02, a foreign corporation that transacts business in North Carolina is barred from maintaining an action in any state court unless it has obtained a certificate of authority to transact business prior to trial. An issue arising under this subsection must be raised by motion and determined by the trial judge prior to trial, N.C. Gen. Stat. § 55-15-02(a).

Facts:

Appellant Harold Lang Jewelers, Inc. ("Lang"), a Florida corporation, filed suit against the appellees ("Johnson"). Lang filed suit in April 1999, alleging that Johnson owed it $ 160,322.90 plus interest for jewelry sold or consigned. Johnson answered in May 1999, asserting as one of its eight affirmative defenses that Lang could not sue in a North Carolina court because Lang had failed to obtain a certificate of authority to transact business in the state. On January 7, 2002, the case was called for trial. At that time, Johnson orally raised the defense of Lang's failure to obtain a certificate of authority and requested a hearing on that issue. After hearing evidence and argument, the district court granted the motion and dismissed Lang's action. Lang appealed.

Issue:

Was a foreign corporation that transacted business in North Carolina barred from maintaining an action in any state court unless it had obtained a certificate of authority to transact business prior to trial?

Answer:

Yes.

Conclusion:

The appellate court found that the pretrial order indicated that there were no pending motions before the trial court which needed resolution prior to trial. However, the record reflected that in fact there was a motion pending, concerning whether plaintiff could avail itself of the courts of North Carolina. Pursuant to N.C. Gen. Stat. § 55-15-02, a foreign corporation that transacted business in North Carolina was barred from maintaining an action in any state court unless it had obtained a certificate of authority to transact business prior to trial. The appellate court held that the trial court acted within its discretion when it addressed this issue prior to trial. The appellate court further held that the trial court properly found that plaintiff was transacting business in North Carolina. Transacting business was defined as engaging in, carrying on, or exercising some of the functions for which the corporation was created. The evidence indicated that plaintiff had sold and consigned merchandise to jewelry stores in North Carolina since 1970.