Court Opinion

ID: 4540639
Source: CourtListenerOpinion
Date Created: 2020-06-11 16:04:22.124717+00
Date Added: 2024-06-11T08:49:28.639333
License: Public Domain

FILED
                                                                    Jun 11 2020, 7:51 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEE
KENNY FERRAND                                              Fred L. Cline
Leanna Weissmann                                           Oliver & Cline, LLP
Lawrenceburg, Indiana                                      Danville, Indiana
ATTORNEY FOR APPELLANTS
FLS, RER, RS, AND BILLY FERRAND
Joel C. Wieneke
Wieneke Law Office, LLC
Brooklyn, Indiana

                                             IN THE
    COURT OF APPEALS OF INDIANA

Ferrand Laser Screeding, Inc.,                             June 11, 2020
Reliable Equipment Rental Inc.,                            Court of Appeals Case No.
Reliable Screeding Inc.,                                   19A-PL-1947
Kenny Ferrand, and                                         Appeal from the
Billy Ferrand,                                             Putnam Circuit Court
Appellants, Cross-Appellees,                               The Honorable
Defendants,                                                Matthew Headley, Judge
       v.                                                  Trial Court Cause No.
                                                           67C01-1508-PL-0244
Concrete Management
Solutions, LLC,
Appellee, Cross-Appellant, Plaintiff

Vaidik, Judge.

Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020                            Page 1 of 12
                                            Case Summary
[1]   Concrete Management Solutions, LLC (CMS) brought an action against

      Ferrand Laser Screeding, Inc., Reliable Equipment Rental Inc., Reliable

      Screeding Inc., Kenny Ferrand, and Billy Ferrand (“the Defendants”), seeking

      to domesticate and collect on an Ohio judgment. The trial court ruled for CMS

      on some claims and for the Defendants on the others. The Defendants appeal,

      and CMS cross-appeals. We hold that the Ohio court lacked personal

      jurisdiction, that as a result the Ohio judgment is void, and that the Defendants

      are therefore entitled to judgment on all of CMS’s claims.

                             Facts and Procedural History
[2]   In 2010, CMS, an Ohio limited liability company, contracted with Subway

      Restaurants to construct a concrete parking lot in Milford, Connecticut. CMS

      then hired Ferrand Laser Screeding, Inc. (FLS), an Indiana corporation owned

      and operated by Billy Ferrand, to provide laser-screeding services on the

      project. (Laser screeding is a method of leveling concrete.) In early 2012, CMS

      was sued in relation to the project in Medina County, Ohio. It then filed a third-

      party complaint against FLS, claiming that FLS “breached its agreement with

      CMS by failing to properly finish the parking lot causing divots in the concrete,

      uneven concrete and visually unappealing concrete.” Appellants’ App. Vol. II

      p. 78. FLS did not answer the complaint, and in June 2012 CMS obtained a

      default judgment for $155,121.54.

      Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020       Page 2 of 12
[3]   In August 2015, having received no payments on the judgment, CMS brought

      an action against FLS in Putnam County, Indiana. CMS also named as

      defendants Billy Ferrand, Billy’s brother Kenny Ferrand, Reliable Equipment

      Rental Inc. (RER), and Reliable Screeding Inc. (RS). CMS alleged that after it

      sued FLS in Ohio, Billy and Kenny formed RER and RS in Indiana and then

      executed an agreement transferring FLS’s assets to RER. According to CMS,

      “RER was formed to transfer the business of FLS to RER for the sole purpose

      of avoiding the creditors of FLS and to avoid paying FLS’s debt to Plaintiff.”

      Id. at 34. In Count I of the complaint, CMS requested domestication of the

      Ohio judgment. In Count II, it alleged that the Defendants “engaged in

      fraudulent acts in furtherance of a fraudulent scheme to transfer all of the assets

      of FLS out of the reach of CMS” and that as a result the transfer was voidable

      under the Uniform Fraudulent Transfer Act (specifically, Indiana Code section

      32-18-2-14). Id. at 33. In Count III, CMS claimed that RER is an “alter ego” of

      FLS and is liable to CMS for FLS’s debt. Id. at 34.

[4]   The Defendants responded to CMS’s complaint with a motion to dismiss,

      arguing, among other things, that the Ohio court lacked personal jurisdiction

      over FLS and that the Ohio judgment was therefore void. After a hearing, the

      trial court denied the motion to dismiss. The Defendants then moved for

      summary judgment, making the same personal-jurisdiction argument and also

      challenging CMS’s fraudulent-transfer claim. The trial court denied that

      motion in January 2018. The same month, CMS amended its complaint to add

      a claim that transferring FLS’s assets constituted criminal fraud under Indiana

      Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020         Page 3 of 12
      Code section 35-43-5-4(8) and that CMS is therefore entitled to treble damages

      under Indiana’s Crime Victims Relief Act (CVRA), see Ind. Code § 34-24-3-1.

      CMS also added an allegation that “Billy and Kenny are liable to Plaintiff for

      the debts of FLS because they are alter egos of FLS.” Appellants’ App. Vol. II

      p. 194.

[5]   The trial court held a bench trial in May 2019. In its final order, the court (1)

      domesticated the Ohio judgment against FLS and (2) “pierced the corporate

      veil” of FLS and held the other defendants liable for the judgment. However,

      the court concluded that CMS had not proven its fraudulent-transfer and

      CVRA claims and entered judgment for the Defendants on those claims.

[6]   The Defendants now appeal, and CMS cross-appeals.

                                  Discussion and Decision
[7]   The Defendants renew their argument that the Ohio court lacked personal

      jurisdiction over FLS and that the Ohio judgment is therefore void and not

      eligible for domestication in Indiana. They also argue that even if the Ohio

      judgment is valid, the trial court erred by piercing FLS’s corporate veil and

      holding the other defendants liable for the judgment. CMS disputes those

      arguments and, in its cross-appeal, asserts that the trial court erred by rejecting

      its fraudulent-transfer and CVRA claims. We agree with the Defendants that

      the Ohio court lacked personal jurisdiction and therefore reverse the trial court’s

      domestication of the Ohio judgment. And because CMS’s veil-piercing,

      Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020          Page 4 of 12
      fraudulent-transfer, and CVRA claims are based on the existence of a valid

      Ohio judgment, those claims are moot, and the trial court should have

      dismissed them without reaching their merits.1

[8]   A judgment of a sister state is presumed to be valid but is “open to collateral

      attack for want of personal jurisdiction or subject matter jurisdiction.”

      Commercial Coin Laundry Sys. v. Enneking, 766 N.E.2d 433, 439 (Ind. Ct. App.

      2002). The party attacking such a judgment has the burden of rebutting the

      presumption of validity. Id. In assessing a claim that a foreign judgment is void

      for lack of personal jurisdiction, we apply the law of the state where the

      judgment was rendered. Id.

[9]   In Ohio, a trial court can have personal jurisdiction over an out-of-state

      defendant only if the state’s “long-arm statute and the applicable rule of civil

      procedure confer jurisdiction.” Kauffman Racing Equip., L.L.C. v. Roberts, 930

      N.E.2d 784, 790 (Ohio 2010). The jurisdiction granted by Ohio’s long-arm

      statute is more limited than long-arm jurisdiction under Indiana law. In

      Indiana, long-arm jurisdiction is governed by Indiana Rule of Trial Procedure

      4.4(A), which provides:

              (A) Acts Serving as a Basis for Jurisdiction. Any person or
              organization that is a nonresident of this state, a resident of this
              state who has left the state, or a person whose residence is
              unknown, submits to the jurisdiction of the courts of this state as

      1
       CMS does not argue that its veil-piercing, fraudulent-transfer, and CVRA claims are viable without the
      domestication of the Ohio judgment.

      Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020                               Page 5 of 12
        to any action arising from the following acts committed by him
        or her or his or her agent:

                 (1)    doing any business in this state;

                 (2) causing personal injury or property damage by an act
                 or omission done within this state;

                 (3) causing personal injury or property damage in this
                 state by an occurrence, act or omission done outside this
                 state if he regularly does or solicits business or engages in
                 any other persistent course of conduct, or derives
                 substantial revenue or benefit from goods, materials, or
                 services used, consumed, or rendered in this state;

                 (4) having supplied or contracted to supply services
                 rendered or to be rendered or goods or materials furnished
                 or to be furnished in this state;

                 (5) owning, using, or possessing any real property or an
                 interest in real property within this state;

                 (6) contracting to insure or act as surety for or on behalf
                 of any person, property or risk located within this state at
                 the time the contract was made;

                 (7) living in the marital relationship within the state
                 notwithstanding subsequent departure from the state, as to
                 all obligations for alimony, custody, child support, or
                 property settlement, if the other party to the marital
                 relationship continues to reside in the state; or

                 (8) abusing, harassing, or disturbing the peace of, or
                 violating a protective or restraining order for the protection
Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020                Page 6 of 12
                        of, any person within the state by an act or omission done
                        in this state, or outside this state if the act or omission is
                        part of a continuing course of conduct having an effect in
                        this state.

               In addition, a court of this state may exercise jurisdiction on
               any basis not inconsistent with the Constitutions of this state
               or the United States.

       (Emphasis added). That last provision—“a court of this state may exercise

       jurisdiction on any basis not inconsistent with the Constitutions of this state or

       the United States”—means that an Indiana trial court can have personal

       jurisdiction over an out-of-state defendant even if the action does not arise from

       the defendant committing one of the acts enumerated in subsections (1)-(8). In

       other words, Indiana has “general jurisdiction” over an out-of-state defendant

       who has had “continuous and systematic” contacts with Indiana “even in

       causes of action unrelated to the defendant’s contacts with” Indiana.

       LinkAmerica Corp. v. Cox, 857 N.E.2d 961, 967 (Ind. 2006).

[10]   Like Indiana’s Trial Rule 4.4(A), Ohio’s long-arm statute—Ohio Revised Code

       2307.382—provides that a court has personal jurisdiction over an out-of-state

       defendant if the action arises from the defendant committing one of several acts

       in Ohio:

               (A) A court may exercise personal jurisdiction over a person who
               acts directly or by an agent, as to a cause of action arising from
               the person’s:

                        (1) Transacting any business in this state;

       Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020                 Page 7 of 12
                 (2) Contracting to supply services or goods in this state;

                 (3) Causing tortious injury by an act or omission in this
                 state;

                 (4) Causing tortious injury in this state by an act or
                 omission outside this state if he regularly does or solicits
                 business, or engages in any other persistent course of
                 conduct, or derives substantial revenue from goods used or
                 consumed or services rendered in this state;

                 (5) Causing injury in this state to any person by breach of
                 warranty expressly or impliedly made in the sale of goods
                 outside this state when he might reasonably have expected
                 such person to use, consume, or be affected by the goods
                 in this state, provided that he also regularly does or solicits
                 business, or engages in any other persistent course of
                 conduct, or derives substantial revenue from goods used or
                 consumed or services rendered in this state;

                 (6) Causing tortious injury in this state to any person by an
                 act outside this state committed with the purpose of
                 injuring persons, when he might reasonably have expected
                 that some person would be injured thereby in this state;

                 (7) Causing tortious injury to any person by a criminal act,
                 any element of which takes place in this state, which he
                 commits or in the commission of which he is guilty of
                 complicity.

                 (8) Having an interest in, using, or possessing real property
                 in this state;

Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020              Page 8 of 12
                            (9) Contracting to insure any person, property, or risk
                            located within this state at the time of contracting.[2]

       Unlike Indiana’s rule, though, the Ohio statute does not include an “any

       constitutional basis” provision. As a result, it has been held that “under Ohio

       law, a court may exercise personal jurisdiction over a non-resident defendant

       only if specific jurisdiction can be found under one of the enumerated bases

       in Ohio’s long-arm statute.” Conn v. Zakharov, 667 F.3d 705, 718 (6th Cir.

       2012) (emphasis added). Ohio’s long-arm statute does not allow for “general

       jurisdiction” over out-of-state defendants—an Ohio court has personal

       jurisdiction over such a defendant only if the action arises from the defendant

       committing one of the specifically enumerated acts in Ohio.3

[11]   Here, the Defendants contend that the only act on the Ohio list that could apply

       is the first one—“Transacting any business in this state”—and that FLS

       contracting with an Ohio company to work on a Connecticut project did not

       amount to “transacting business” in Ohio. CMS does not dispute that

       “Transacting any business in this state” is the relevant subsection but argues

       2
           Ohio Rule of Civil Procedure 4.3 largely tracks this statute.
       3
        The Ohio Legislature is currently considering a bill—House Bill 272—that would add an “any
       constitutional basis” provision to the state’s long-arm statute. See House Bill 272,
       https://www.legislature.ohio.gov/legislation/legislation-summary?id=GA133-HB-272 (last visited June 9,
       2020). Of course, even if that bill becomes law, it would not impact our analysis of whether the Ohio court
       had personal jurisdiction over FLS in 2012.

       Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020                                Page 9 of 12
       that FLS did “transact business” in Ohio when it entered into the contract. We

       agree with the Defendants.

[12]   The Defendants direct us to Ashton Park Apartments, Ltd. v. Carlton-Naumann

       Construction, Inc., No. L-08-1396, 2009-Ohio-6335, 2009 WL 4446934 (Ohio Ct.

       App. Dec. 4, 2009). There, an Ohio couple contracted with a Florida

       construction company to build a house in Florida. After a defect was discovered

       in the house, the construction company was sued in Ohio. The company moved

       for summary judgment, claiming that the Ohio court lacked personal

       jurisdiction over it. The trial court agreed and dismissed the action. The Court

       of Appeals affirmed. The court acknowledged that “[e]very aspect of the

       contract” concerning the buyers—their execution of the contract, payments,

       and communication—involved Ohio, 2009 WL 4446934 at *4, but ultimately

       held that the construction company “was not ‘transacting business’ in Ohio by

       entering into a single contract with two Ohio residents to build a home in

       Florida,” id. at *5.

[13]   Despite the Defendants’ heavy reliance on Ashton Park, CMS fails to even

       acknowledge the decision. Instead, CMS argues that this case is governed by

       Kentucky Oaks Mall Co. v. Mitchell’s Formal Wear, Inc., 559 N.E.2d 477 (Ohio

       1990). There, a Georgia company entered into a lease for a storeroom in a

       Kentucky mall owned by an Ohio company. The lease was for ten years and

       required the Georgia company to send all lease payments to an Ohio address.

       The Ohio company later sued the Georgia company in Ohio, alleging that the

       Georgia company was in default. The Georgia company moved to dismiss for

       Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020      Page 10 of 12
       lack of personal jurisdiction. The trial court granted the motion. The Ohio

       Supreme Court reversed, holding that “a commercial nonresident lessee, for

       purposes of personal jurisdiction, is ‘transacting any business’ within the plain

       and common meaning of the phrase, where the lessee negotiates, and through

       the course of dealing becomes obligated, to make payments to its lessor in

       Ohio.” Id. at 480.

[14]   The case before is much more like Ashton Park than Kentucky Oaks. Unlike the

       Georgia lessee in Kentucky Oaks, which agreed to make payments to an Ohio

       lessor for ten years (a fact that CMS does not mention in its brief), FLS did not

       agree to any ongoing obligations in Ohio. To the contrary, just as the

       construction company in Ashton Park entered into a single contract with two

       Ohio residents to build a home in Florida, FLS entered into a single contract

       with an Ohio company to work on a project in Connecticut. Under Ashton Park,

       this did not constitute “transacting business” in Ohio. As such, Ohio’s long-arm

       statute did not confer personal jurisdiction over FLS, and the Ohio judgment is

       void.

[15]   The trial court should have denied CMS’s request for domestication of the Ohio

       judgment. And because CMS’s veil-piercing, fraudulent-transfer, and CVRA

       claims are moot without the domestication of the Ohio judgment, the trial court

       should have dismissed them without reaching their merits. We reverse the

       judgment of the trial court and remand this matter for the entry of a revised

       judgment consistent with this opinion.

       Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020        Page 11 of 12
[16]   Reversed and remanded.

       May, J., and Robb, J., concur.

       Court of Appeals of Indiana | Opinion 19A-PL-1947 | June 11, 2020   Page 12 of 12