North Carolina: 'Destination State' for Business Lawsuits? What the NC Supreme Court Case Means for You
If you operate a business in North Carolina and you've registered to do business in other states - maybe you expanded into Virginia or South Carolina, or you needed to register in Tennessee to close a deal - there's a recent court case you need to be aware of.
The NC Supreme Court is reviewing a December Appeals Court ruling that could change how we think about business registration and legal liability. Quite candidly, this case reveals something about asset protection and jurisdiction that most business owners don't understand.
What Happened in This Case
An aircraft accident occurred in Arkansas in 2024. A North Carolina company owned the plane and filed a lawsuit here in NC against several defendants - including Textron, a Rhode Island-based corporation.
Textron asked to be dismissed from the North Carolina lawsuit. The company argued it has no physical presence here - no offices, no facilities, no employees, no bank accounts in North Carolina. Textron didn't manufacture the aircraft component in question. The company had no connection to North Carolina except one thing: Textron is registered to do business in this state.
The trial court denied Textron's motion to dismiss. The NC Court of Appeals upheld that decision, ruling that any out-of-state company registered to do business in North Carolina "consents to general personal jurisdiction" in our state courts.
Let me be very clear about what the Court of Appeals held: If that ruling ultimately stands, simply being registered in North Carolina would allow you to be sued here - even if the lawsuit has nothing to do with North Carolina, involves events that happened somewhere else, and affects people who don't live here.
You can read more about the case in this Carolina Journal article.
Why This Matters for Your Business
You might be thinking - I'm not Textron. I'm a small business owner in Raleigh or Cary. Why does this affect me?
Here's the thing: The legal principle works both ways.
If North Carolina courts adopt this "consent-by-registration" approach, it raises questions about what happens to North Carolina businesses that register in other states. Depending on how a particular state's statutes and courts treat registration, you could be exposed to being sued there on claims with little or no in-state connection.
Let's say you own an LLC in North Carolina. Your business is growing, so you register to do business in Virginia to work with clients there. Some states - like Pennsylvania after the U.S. Supreme Court's Mallory decision - have explicit statutes that treat registration as consent to broad jurisdiction. Other states have different rules or haven't addressed this question directly.
The landscape is different in every state, and many business owners and their advisors are still working through what these developments mean for multi-state operations.
The Asset Protection Question
When we work with business owners on asset protection planning, we look at entity structure, liability exposure, and how to protect what you've built. Part of that analysis involves understanding where your business can be sued and under what circumstances.
If you operate in multiple states, you need to consider:
Which states you're registered in
What that registration might mean for jurisdiction in those states
How your business structure affects liability exposure across state lines
Whether your current setup provides the protection you think it does
For now, enforcement of the Appeals Court's consent-by-registration ruling is stayed while the North Carolina Supreme Court considers further review. The Supreme Court issued a temporary stay on January 9, 2026, so this issue is not settled yet. The high court will decide whether to take further action in the months ahead.
What You Should Do Now
I want to strongly recommend that you don't wait to see how this plays out if you operate across state lines. The best time to implement asset protection strategies is before any legal or financial threats arise. Once a lawsuit has been filed, your options become limited.
If your business is registered in multiple states, or if you're considering expanding your operations beyond North Carolina, we can help you review your entity structure and registration strategy. We can walk you through the liability exposure you may face and discuss ways to protect your business and personal assets.
At the Walls Law Group, we help business owners throughout the great state of North Carolina with asset protection planning that considers both current operations and future growth. If we can be of assistance to you, please reach out to us at 919-647-9599.
Legal Disclaimer: This article is provided for general informational and educational purposes only and does not constitute legal advice. The discussion of the PDII v. Sky Aircraft Maintenance case reflects the current status as of January 2026, with the North Carolina Court of Appeals ruling stayed pending North Carolina Supreme Court review. Laws and court decisions vary by jurisdiction and change over time. This article should not be relied upon as a substitute for consultation with a qualified attorney regarding your specific business situation and legal needs.
