Case Title: Glumina Bank v. D.C. Diamond Corporation

Citation: 

Docket Number: 991042

State: virginia

Court: Virginia Supreme Court

Date: 2000-03-03T00:00:00Z

Document:
Present:  Carrico, C.J., Compton,∗ Lacy, Hassell, Keenan, Koontz, 
and Kinser, JJ. 
 
 
GLUMINA BANK d.d. 
 
 
 
    OPINION BY JUSTICE A. CHRISTIAN COMPTON 
v.  Record No. 991042 
March 3, 2000 
 
D. C. DIAMOND CORPORATION, ET AL. 
 
 
FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY 
Frank A. Hoss, Jr., Judge 
 
 
In this appeal of a default judgment in a contract action 
against a nonresident defendant, we must determine whether the 
trial court properly entered the judgment. 
 
On October 7, 1998, appellees D. C. Diamond Corporation and 
Karlo Milic filed in the clerk's office of the court below a 
motion for judgment against appellant Glumina Bank d.d., for 
breach of contract.  The plaintiffs sought recovery of $460,000 
plus attorney's fees and interest. 
 
The plaintiffs alleged that Diamond is a Virginia 
corporation engaged in the business of real estate development 
and that Milic is an alien resident of the Commonwealth but a 
citizen of Croatia.  The plaintiff further alleged that 
defendant is a bank located in Zagreb, Croatia. 
 
The plaintiffs also alleged that on two occasions in June 
1998, acting through Milic, they contracted with defendant "to 
                     
∗ Justice Compton participated in the hearing and decision of 
this case prior to the effective date of his retirement on 
transfer, deliver, and supply" to the corporation's bank account 
in Manassas a total of $460,000 from cash funds delivered in 
American dollars to defendant from the sale of real estate.  The 
plaintiffs further alleged that defendant "failed to transfer, 
deliver, and supply the funds as promised." 
 
The plaintiffs also alleged that on "several occasions 
prior to" June 1998, "pursuant to contracts" between the 
plaintiffs and defendant, the defendant "had transferred, 
delivered, and supplied" to the corporation's Manassas bank 
account funds received in Croatia from Milic. 
 
Additionally, plaintiffs alleged that when the contracts 
were entered into on June 19 and 29, 1998, Milic and defendant 
"clearly and definitely intended" that the corporation be "a 
direct beneficiary of those contracts," and that the corporation 
"was and is both a direct beneficiary and a third party 
beneficiary of those contracts." 
 
Also, plaintiffs alleged that they had made demand upon 
defendant "to honor its contractual obligations to supply the 
funds" to the corporation in Virginia but defendant "has failed 
to do so and has refused to refund the funds to Milic." 
 
Finally, plaintiffs alleged that the trial court could 
exercise personal jurisdiction over defendant pursuant to Code 
§ 8.01-328.1(A)(2) ("court may exercise personal jurisdiction 
                                                                  
February 2, 2000. 
 
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over a person, who acts directly or by an agent, as to a cause 
of action arising from the person's . . . [c]ontracting to 
supply services or things in this Commonwealth . . . ."). 
 
The plaintiffs filed with the motion for judgment an 
affidavit for service of process on the Secretary of the 
Commonwealth as statutory agent for the nonresident defendant, 
as authorized by Code § 8.01-329(B).  As required, the affidavit 
set forth the last known address of the defendant in Croatia. 
 
In a Certificate of Compliance, the Secretary of the 
Commonwealth reported to the trial court that service of the 
notice of motion for judgment was made on her on October 13, 
1998, and that the suit papers were forwarded by registered mail 
to defendant at the Croatian address on November 2, 1998.  
Service was effective on November 10, 1998, when the Certificate 
of Compliance was filed in the circuit court.  Code § 8.01-
329(C). 
 
The defendant failed to file a pleading in response within 
21 days after service of process; therefore, it was in default.  
Rule 3:5; Rule 3:17. 
 
On December 14, 1998, a paper labeled "Pleading on Motion 
for Judgement" was lodged with the clerk of the trial court.  It 
was signed "Glumina Bank by Attorney . . . Mladen Simundic," 
giving a Croatian address.  Defendant's counsel of record on 
appeal correctly admits that this "responsive pleading" was not 
 
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filed by an attorney authorized to practice law in Virginia and, 
as such, is a "nullity and should be stricken." 
 
On December 22, 1998, another Certificate of Compliance was 
filed in the trial court by the Secretary of the Commonwealth 
dated five days earlier.  That document included another 
affidavit executed by plaintiffs' attorney to support service of 
process of a "Praecipe" upon the nonresident defendant.  The 
Certificate reported:  "On Dec 17 1998, papers described in the 
Affidavit were forwarded by Fed Ex mail, return receipt 
requested, to the party designated to be served with process in 
the Affidavit."  The praecipe served on defendant through the 
Secretary of the Commonwealth was a notice and motion filed in 
the clerk's office below on December 7, 1998, returnable 
December 18, 1998, for entry of a default judgment. 
 
The hearing on the motion for default judgment was 
continued to February 19, 1999.  On that day, counsel for the 
plaintiffs appeared in support of the motion.  There was no 
appearance by or on behalf of the defendant.  After a brief 
hearing, at which only an interpreter testified, the court 
entered a default judgment against the defendant in the amount 
of $460,000 plus interest and attorney's fees. 
 
Three days later, on February 22, 1999, defendant, through 
a Virginia attorney, filed a "Special Appearance, Motion to 
Quash Service and Objection to Jurisdiction," as well as a 
 
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"Notice and Motion to Set Aside Default Judgment."  Following a 
March 5, 1999 hearing on the several motions, at which counsel 
for the plaintiffs and counsel for the defendant appeared, the 
court denied the motions. 
 
The defendant appeals and contends the trial court erred in 
entering the default judgment.  It argues that the trial court 
lacked personal jurisdiction over defendant, and that the 
service of process of the notice of motion for judgment and the 
praecipe through the Secretary of the Commonwealth was improper 
because none of the bases for personal jurisdiction under Code 
§ 8.01-328.1 "have been alleged or proven."  These contentions 
are meritless. 
 
Of course, any money judgment rendered without personal 
jurisdiction over the defendant is void.  Finkel Outdoor Prods., 
Inc. v. Bell, 205 Va. 927, 931, 140 S.E.2d 695, 698 (1965).  But 
as we already have said, Code § 8.01-328.1(A)(2), a part of 
Virginia's long-arm statute dealing with the exercise of in 
personam jurisdiction over nonresidents, permits courts of the 
Commonwealth to "exercise personal jurisdiction over a person, 
who acts directly or by an agent, as to a cause of action 
arising from the person's . . . [c]ontracting to supply services 
or things in this Commonwealth." 
 
A "person," as used in the foregoing statute, includes a 
"commercial entity, whether or not a citizen or domiciliary of 
 
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this Commonwealth and whether or not organized under the laws of 
this Commonwealth."  Code § 8.01-328.  Thus, nonresident 
defendant Glumina Bank qualifies as a "person" under the 
statute. 
 
"The function of our long-arm statute is to assert 
jurisdiction over nonresidents who engage in some purposeful 
activity in Virginia, to the extent permissible under the Due 
Process Clause of the Constitution of the United States."  Nan 
Ya Plastics Corp. U.S.A. v. DeSantis, 237 Va. 255, 259, 377 
S.E.2d 388, 391, cert. denied, 492 U.S. 921 (1989).  Accord 
Peninsula Cruise, Inc. v. New River Yacht Sales, Inc., 257 Va. 
315, 319, 512 S.E.2d 560, 562 (1999).  The Due Process Clause, 
however, protects a person's liberty interest in not being 
subject to the binding judgment of a forum unless the person has 
"certain minimum contacts" within the territory of the forum so 
that maintenance of the action does not offend "traditional 
notions of fair play and substantial justice."  DeSantis, 237 
Va. at 259, 377 S.E.2d at 391 (quoting International Shoe Co. v. 
Washington, 326 U.S. 310, 316 (1945)).  Accord Peninsula Cruise, 
257 Va. at 319, 512 S.E.2d at 562. 
 
To determine whether this nonresident defendant engaged in 
some purposeful activity in Virginia and whether it had 
sufficient minimum contacts within the Commonwealth, we must 
examine the facts.  In this case, because the defendant was in 
 
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default under our rules of procedure, the trial court properly 
could find the factual allegations of the motion for judgment 
accurate, as those allegations related to personal jurisdiction.  
See Landcraft Co. v. Kincaid, 220 Va. 865, 874, 263 S.E.2d 419, 
425 (1980). 
 
Those jurisdictional facts establish that defendant, 
pursuant to contracts between the plaintiffs and defendant 
entered into before June 19, 1998, had transferred to the 
Diamond Corporation's Manassas bank account funds received in 
Croatia from Milic.  In accord with this prior course of 
dealing, the defendant entered into two more contracts in June 
1998 in which it promised again to transfer to the corporation's 
Manassas bank account a total of $460,000 delivered in cash by 
Milic to defendant.  According to the facts, the defendant 
breached both of the June contracts by failing to honor its 
obligations to supply the funds to the corporation's Virginia 
account or to refund the money to Milic. 
 
Consequently, the plaintiffs' cause of action for breach of 
contract clearly arises from the defendant's "[c]ontracting to 
supply services or things in this Commonwealth," in the language 
of the long-arm statute.  Manifestly, the nonresident defendant 
has engaged in purposeful activity in Virginia, and there are 
sufficient minimum contacts within Virginia so that maintenance 
of this action here does not offend traditional notions of fair 
 
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play and substantial justice.  See Elefteriou v. Tanker 
Archontissa, 443 F.2d 185, 188 (4th Cir. 1971) (failure to make 
payment to seaman under contract made outside United States by 
ship owner for payment within Virginia provides basis for 
assertion of personal jurisdiction for owner's supplying 
services or things in Virginia within meaning of long-arm 
statute).  Compare Promotions, Ltd. v. Brooklyn Bridge 
Centennial Comm'n, 763 F.2d 173, 175 (4th Cir. 1985) (seeking to 
enforce its right to sell the Brooklyn Bridge, entrepreneur 
plaintiff, a Virginia corporation, failed to establish personal 
jurisdiction over New York defendants in Virginia under portion 
of long-arm statute at issue here because "any contract between 
plaintiff and defendants was made and was to be carried out in 
New York.  The long arm of § 8.01 does not extend to a contract 
formed and performed outside Virginia"). 
 
The defendant's second contention that service of the 
notice of motion for judgment and the praecipe through the 
Secretary of the Commonwealth was improper because none of the 
bases for personal jurisdiction under Code § 8.01-328.1 "have 
been alleged or proven" is but a rehash of its first contention.  
Code § 8.01-329 plainly provides for service of process to be 
made upon the Secretary of the Commonwealth as statutory agent 
of a person against whom "the exercise of personal jurisdiction 
 
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is authorized" under Code § 8.01-328.1.  This nonresident 
defendant is such a person, as we have just demonstrated. 
 
In sum, there was full compliance by the plaintiffs with 
each procedural requirement leading to the judgment by default.  
See Landcraft Co., 220 Va. at 872-73, 263 S.E.2d at 424.  
Accordingly, we hold that the trial court properly entered the 
default judgment, and it will be 
Affirmed. 
 
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