Court Opinion

ID: 2793860
Source: CourtListenerOpinion
Date Created: 2015-04-15 14:03:03.589241+00
Date Added: 2024-06-11T11:29:06.754383
License: Public Domain

MEMORANDUM DECISION
                                                                   Apr 15 2015, 9:42 am
Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded as
precedent or cited before any court except for the
purpose of establishing the defense of res judicata,
collateral estoppel, or the law of the case.

ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Larry L. Barnard                                          Donald E. Sommerfeld Jr.
Carson Boxberger LLP                                      McGregor & Sommerfeld PLLC
Fort Wayne, Indiana                                       Mio, Michigan

                                                          Brian R. Gates
                                                          Jones Obenchain, LLP
                                                          South Bend, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Reinforcing Services Company,                             April 15, 2015
LLC, Steven Estes, and Wesco                              Court of Appeals Case No.
Wind, LLC,                                                90A02-1410-PL-764
                                                          Appeal from the Wells Circuit Court
Appellants-Plaintiffs,
                                                          The Honorable Kenton W. Kiracofe,
        v.                                                Judge

Whaley Steel Corp. and James                              Case No. 90C01-1304-PL-7
Whaley,
Appellees-Defendants

Crone, Judge.

Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015      Page 1 of 10
                                               Case Summary
[1]   The trial court dismissed the action brought by plaintiffs Reinforcing Services

      Company, LLC, Steven Estes, and Wesco Wind, LLC (collectively

      “Appellants”), against Michigan defendants Whaley Steel Corp. and James

      Whaley (collectively “Appellees”), holding that the court lacked personal

      jurisdiction over the defendants. We affirm.

                                    Facts and Procedural History
[2]   The facts most favorable to the trial court’s order are as follows. Reinforcing

      Services Company (“RSC”) is a limited liability company organized and

      existing under the laws of the State of Indiana. Steven Estes is a resident of

      Wells County, Indiana. Wesco Wind (“Wesco”) is a limited liability company

      organized and existing under the laws of the State of Indiana. Whaley Steel

      Corp. (“WSC”) is a corporation organized and existing under the laws of the

      State of Michigan, with a principal place of business in Mio, Michigan. James

      Whaley, employed by WSC as a field operations manager, is a resident of the

      State of Michigan.

[3]   Sometime during 2006, WSC and Brett Sanders of Sanders Rebar One1 entered

      into a joint venture on wind farm projects in Montana, Minnesota, and Illinois.

      Their final wind farm project was Hoosier Hill, located in Indiana. The

      Hoosier Hill wind farm project started in March 2009 and ended in July 2009.

      1
          The record does not indicate where Sanders and Sanders Rebar One hail from.

      Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 2 of 10
      Estes, RSC, and Wesco had nothing to do with this project or the other

      projects.

[4]   In April or May of 2009, Estes initiated contact with WSC at its principal place

      of business in Michigan because he had projects that he could not finance that

      he wanted WSC to take over. WSC agreed to do so, though the agreement was

      never reduced to writing. The negotiations were minimal and lasted about

      three hours. The agreement provided that WSC would pay Estes $7500 a

      month to estimate and procure work for WSC in Illinois. The agreement was

      between WSC and Estes only and did not include RSC or Wesco. Pursuant to

      the agreement, WSC made payments of $7500 to Estes in May and June 2009.

      Estes failed to procure work for WSC in Illinois, and following these payments,

      he emailed WSC to inform it that he was quitting.

[5]   Later in 2009, Estes initiated contact with Whaley because he wanted to

      purchase Whaley’s fifteen percent interest in Wesco. Whaley asked his

      attorney, who was from Michigan, to draft a promissory note which provided

      that Estes would pay Whaley $150,000 in exchange for Whaley’s interest in

      Wesco. The membership interest purchase agreement provided that the

      agreement would be interpreted in accordance with Michigan laws. Whaley

      never received the money promised in the note.

[6]   On April 4, 2013, Appellants filed a complaint against Appellees alleging

      breach of contract and unjust enrichment and asking the court for a declaratory

      judgment regarding the amounts due under the terms of the membership

      Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 3 of 10
      interest purchase agreement and promissory note. On June 13, 2013, Appellees

      filed a motion to dismiss based upon lack of personal jurisdiction. On June 18,

      2013, the trial court set the matter for hearing on October 23, 2013. On

      September 13, 2013, Appellees filed a motion to summarily dismiss under

      Indiana Trial Rule 41(E). On October 18, 2013, the trial court reset the hearing

      for January 29, 2014. On January 29, 2014, the trial court held a hearing on all

      pending matters.2 On July 2, 2014, Appellees filed a brief to dismiss based upon

      lack of personal jurisdiction. On September 24, 2014, the court dismissed the

      action for lack of personal jurisdiction. Appellants appeal.

                                       Discussion and Decision
[7]   Personal jurisdiction is a question of law that is entitled to de novo review by

      appellate courts. LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 965 (Ind. 2006).

      “We do not defer to the trial court’s legal conclusion as to whether personal

      jurisdiction exists.” Id. “However, personal jurisdiction turns on facts,

      typically the contacts of the defendant with the forum, and findings of fact by

      the trial court are reviewed for clear error.” Id.

[8]   The Due Process Clause of the Fourteenth Amendment of the United States

      Constitution mandates that personal jurisdiction over a defendant must exist for

      2
        Appellants included a portion of the hearing transcript in their appendix, and Appellees included the entire
      transcript in their appendix. Indiana Appellate Rule 50(F) states, “Because the Transcript is transmitted to
      the Court on Appeal pursuant to Rule 12(B), parties should not reproduce any portion of the Transcript in
      the Appendix.”

      Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015               Page 4 of 10
      a valid judgment to be entered. Wolf’s Marine, Inc. v. Brar, 3 N.E.3d 12, 15 (Ind.

      Ct. App. 2014). Indiana’s “long-arm” rule for exercising personal jurisdiction

      over out-of-state defendants, Indiana Trial Rule 4.4(A), permits the exercise of

      personal jurisdiction in any manner consistent with the Due Process Clause. Id.

      When a defendant argues a lack of personal jurisdiction, the plaintiff must

      present evidence to show that there is personal jurisdiction over the defendant.

      Munster v. Groce, 829 N.E.2d 52, 57 (Ind. Ct. App. 2005). The defendant bears

      the burden of proving the lack of personal jurisdiction by a preponderance of

      the evidence, unless the lack of jurisdiction is apparent on the face of the

      complaint. Id.

[9]   Jurisdiction over a person comports with the Due Process Clause if the person

      has “certain minimum contacts with the forum such that the maintenance of

      the suit does not offend traditional notions of fair play and substantial justice.”

      Brockman v. Kravic, 779 N.E.2d 1250, 1256 (Ind. Ct. App. 2002) (citing Int’l Shoe

      Co. v. Washington, 326 U.S. 310 (1945)). The existence of personal jurisdiction

      depends on the nature and quality of the defendant’s contacts with the forum.

      Id. These contacts must “consist of some action by which the defendant

      purposefully avails itself of the privilege of conducting activities within the

      forum state, thus invoking the benefits and protections of its laws.” Id. (citing

      Hanson v. Denckla, 357 U.S. 235 (1958)). “Only the purposeful acts of the

      defendant, not the acts of the plaintiff or any third parties, satisfy this

      requirement.” Id.

      Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 5 of 10
[10]   To determine whether personal jurisdiction exists under the Due Process

       Clause, courts first “must look at the contacts between the defendant and the

       forum state to determine if they are sufficient to establish that the defendant

       could reasonably anticipate being haled into court there.” Id. “Contacts are

       any acts physically performed in the forum state or acts performed outside the

       forum state that have an effect within the forum.” Id. Whether the contacts are

       sufficient for personal jurisdiction requires a fact-specific analysis based on five

       factors: (1) whether the claim arises from the defendant’s forum contacts; (2)

       the overall contacts of the defendant or its agent with the forum state; (3) the

       foreseeability of being haled into court in that state; (4) who initiated the

       contacts; and (5) whether the defendant expected or encouraged contacts with

       the state. Id. at 1257.

[11]   If the defendant has sufficient contacts with the forum, courts “must further

       decide whether asserting personal jurisdiction over the defendant offends

       traditional notions of fair play and substantial justice.” Id. “The fairness

       inquiry is separate from the contacts question and may be used to defeat

       jurisdiction even if the defendant has sufficient contacts with the forum state.”

       Id.

[12]   A defendant’s contacts with a state may give rise to either general or specific

       personal jurisdiction. As we explained in Brockman:

               General personal jurisdiction refers to the ability to be sued for any
               claim in a state. In order to establish general personal jurisdiction, the
               court must find continuous and systematic contacts with the forum
               state such that the defendant could reasonably foresee being haled into
       Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 6 of 10
               court in that state for any matter. General personal jurisdiction may
               exist if the contacts are substantial, continuous, and systematic. The
               contacts required for general personal jurisdiction are greater than
               those needed to establish specific personal jurisdiction.
               Specific personal jurisdiction is jurisdiction that stems from the
               defendant’s having certain minimum contacts with the forum state so
               that the court may hear a case whose issues arise from those minimum
               contacts. Under this theory, the defendant’s isolated contacts with a
               state that are not enough to establish general personal jurisdiction may
               be sufficient to allow jurisdiction over any incidents related to those
               contacts. A single contact with a forum state may be enough to
               establish specific personal jurisdiction if it creates a substantial
               connection with the forum state and the suit is based on that
               connection. However, the act must be purposeful, not random or
               attenuated or the unilateral activity of another party or a third person.
       Id. at 1256-57 (citations omitted).

               Section 1 – Whaley is not subject to specific personal
                             jurisdiction in Indiana.
[13]   Appellants’ first argument is that Whaley is subject to specific personal

       jurisdiction in Indiana because the claim asserted against him arose out of his

       position as a minority owner of Wesco. Appellants rely exclusively on the facts

       that the agreement between Estes and Whaley involved Whaley’s ownership

       interest in Wesco, a limited liability company with a principal place of business

       in Indiana, and the transaction was payable by Wesco and guaranteed by Estes,

       an Indiana resident. We find this argument unpersuasive. Whaley’s actions in

       entering this agreement to sell his minority interest of an Indiana limited

       liability company to an Indiana resident do not constitute a “substantial

       connection with the forum state” or lead to the conclusion that Whaley could

       reasonably anticipate being haled into court in Indiana over this claim. Estes,

       not Whaley, initiated these contacts by reaching out to Whaley in Michigan.
       Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 7 of 10
       Their negotiations took place by phone and email, and Whaley never traveled

       to Indiana for any part of this transaction. The purchase agreement and

       promissory note were drafted by Whaley’s Michigan attorney and provided that

       Michigan law would control. We find that Whaley did not “purposefully

       avail[] [himself] of the privilege of conducting activities within” Indiana and did

       not invoke “the benefits and protections of [Indiana] laws.” Brockman, 779

       N.E.2d at 1256. Therefore, Indiana does not have specific personal jurisdiction

       over him.

       Section 2 – WSC is not subject to general personal jurisdiction
                                in Indiana.
[14]   Appellants next argue that WSC is subject to general personal jurisdiction in

       Indiana because it has substantial, continuous, and systematic contacts within

       the state. Appellants base these contacts on the work that WSC has performed

       in Indiana since 2010, asserting that general personal jurisdiction may exist if

       sufficient contacts exist at the time the cause of action arose, at the time the suit

       was filed, or within a reasonable period of time immediately prior to the filing.

       Appellants cite no Indiana cases to support their reasoning, and we fail to find

       support for it as well.3 The underlying event that is the basis of Appellants’

       claims took place in 2009, when WSC had only one isolated contact with

       Indiana and before WSC increased its contacts in the state. We conclude that

       3
        We do not find persuasive Appellants’ citations to cases from other jurisdictions. Under Appellants’
       argument, personal jurisdiction would apply retroactively, which would offend “traditional notions of fair
       play and substantial justice.” Brockman, 779 N.E.2d at 1256.

       Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015             Page 8 of 10
       at the time the underlying event took place, WSC did not have substantial,

       continuous, and systematic contacts in Indiana such that “the defendant could

       reasonably foresee being haled into court in that state for any matter.”

       Brockman, 779 N.E.2d at 1257. Therefore, Indiana does not have general

       personal jurisdiction over WSC.

            Section 3 – The trial court did not abuse its discretion in
                    allowing Appellees to present evidence.
[15]   Finally, Appellants argue that the trial court abused its discretion in allowing

       Appellees to present evidence at the January 29, 2014 hearing without

       providing notice to the parties that evidence would be presented. “[A] trial

       judge has control over the proceedings in his court, and his duty is to conduct

       business expeditiously and consistent with the orderly procedure and

       administration of justice.” N. Indiana Pub. Serv. Co. v. G.V.K. Corp., 713 N.E.2d

       842, 847 (Ind. Ct. App. 1999), trans. denied (2000). This court will review the

       trial court’s decisions regarding the orderly conduct of a court proceeding for an

       abuse of discretion. Id.

[16]   The notice for the hearing provided that “[a]ll pending matters will be heard at

       that time.” Appellants’ App. at 87. We conclude that Appellants had no

       reason to believe that testimony would not or could not be given at the hearing.

       When a party “challenges the lack of personal jurisdiction, the plaintiff must

       present evidence of a court’s personal jurisdiction over the defendant, but the

       defendant ultimately bears the burden of proving the lack of personal

       jurisdiction by a preponderance of the evidence.” Norris v. Pers. Fin., 957

       Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 9 of 10
       N.E.2d 1002, 1007 (Ind. Ct. App. 2011) (quotation marks and citation omitted).

       The purpose of a hearing on a motion to dismiss for lack of personal

       jurisdiction is to present evidence. The trial court did not abuse its discretion by

       allowing evidence to be presented at the hearing. Therefore, we affirm.

[17]   Affirmed.

       Friedlander, J., and Kirsch, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 90A02-1410-PL-764 | April 15, 2015   Page 10 of 10