Bankmark of Florida, Inc. v. Star Financial Card Services, Inc.

• Decision Date: 13 May 1997
• Docket Number: No. 27A02-9605-CV-271,27A02-9605-CV-271
• Citation: 679 N.E.2d 973
• Parties: BANKMARK OF FLORIDA, INC., Appellant-Defendant, v. STAR FINANCIAL CARD SERVICES, INC., Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 973

679 N.E.2d 973

BANKMARK OF FLORIDA, INC., Appellant-Defendant, v. STAR FINANCIAL CARD SERVICES, INC., Appellee-Plaintiff.

No. 27A02-9605-CV-271.

Court of Appeals of Indiana.

May 13, 1997.

H. Joseph Certain, Therese L. Pryor, Kiley, Kiley, Harker, Michael & Certain, Marion, for Appellant-Defendant.

James T. Beaman, Beaman & Todd, Marion, for Appellee-Plaintiff.

OPINION

BAKER, Judge.

Today, we address the question of whether a trial court may assert personal jurisdiction over a party based on the party's failure to comply with a discovery order. Specifically, appellant-defendant Bankmark of Florida, Inc. appeals the trial court's denial of its motion to dismiss for lack of personal jurisdiction and its grant of summary judgment in favor of appellee-plaintiff Star Financial Card Services, Inc. Bankmark presents several issues for our review, which we restate as follows: (1) whether the trial court erred in determining that it had personal jurisdiction over Bankmark; (2) whether Star's motion for summary judgment was based on inadmissible evidence; and (3) whether a genuine issue of material fact exists which precludes summary judgment.

FACTS

Bankmark is a Delaware corporation which maintains its principal place of business and sole office in Florida. It is engaged in the business of providing administrative services for several companies that sell their merchandise through credit card transactions. Specifically, Bankmark validates the companies' telephone credit card sales and then electronically forwards the validated sales information to a processing center, where the customer's credit card is charged and Bankmark's account is credited for the sales price of the merchandise.

In October 1993, Gerry Stevenson of H.M.S., Inc., a soliciting organization acting on behalf of Star, an Indiana corporation, contacted Sidney Abusch, an officer of Bankmark, with regard to Star providing processing services for Bankmark. Shortly thereafter, Bankmark and Star entered into a "Merchant Agreement" whereby Star agreed to process the credit card charge slips submitted by Bankmark and credit Bankmark's account for the sales price less a processing fee. Under the terms of the agreement, Bankmark warranted that each charge slip submitted to Star represented a bona fide sale of merchandise or services for the amount shown on the credit card slip and agreed to hold Star harmless and indemnify it for any claim or defense interposed by a cardholder. Further, the agreement contained a choice of law provision which provided that the agreement would be construed under Indiana law.

Shortly after Star began processing the credit card slips submitted by Bankmark, cardholders began refusing to pay for their purchases for various reasons. As a result, Star reimbursed the cardholders and sought reimbursement from Bankmark. When Bankmark refused to reimburse Star for the "charge backs" and pay its other fees, Star canceled the agreement and stopped processing Bankmark's credit card slips.

On December 27, 1994, Star filed suit against Bankmark, ¹ alleging breach of contract, unjust enrichment, fraud, civil R.I.C.O. ² and a civil action for criminal conversion. ³ In response, Bankmark filed a motion to dismiss, claiming that the trial court did not have personal jurisdiction over it. Shortly thereafter, on May 15, 1995, Star filed a request for production of documents in order to obtain information pertaining, in part, to the alleged lack of personal jurisdiction. When Bankmark failed to respond by July 17, 1995, Star filed a motion to compel the production of the documents.

Thereafter, on September 6, 1995, Star filed a motion for summary judgment on the grounds that Bankmark defaulted on its obligations under the Merchant Agreement. The trial court then scheduled a combined hearing on the motion for summary judgment and Bankmark's motion to dismiss. However, Bankmark's counsel did not receive On December 22, 1995, Star filed a motion for default judgment based upon Bankmark's failure to respond to its discovery requests and complaint. Thereafter, Bankmark filed a response to the motion for default judgment and requested a hearing on its motion to dismiss. On January 3, 1996, Bankmark informed counsel for Star that the documents it requested were available for inspection.

notice of the hearing and, as a result, failed to attend. The court then contacted counsel for Bankmark via telephone on November 16, 1995, after which it granted Star's motion to compel and ordered Bankmark to produce the requested documents within fifteen days. The court also gave each party thirty days to request additional oral argument or file additional briefs and affidavits with regard to Star's motion for summary judgment and Bankmark's motion to dismiss.

On February 7, 1996, the trial court entered findings of fact and conclusions of law, denying Bankmark's motion to dismiss for lack of personal jurisdiction as a sanction under Ind.Trial Rule 37(B)(2)(b) for Bankmark's failure to produce the requested documents and because the Merchant Agreement between Bankmark and Star provided that it would be construed under Indiana law. The trial court then granted Star's motion for summary judgment. Additional facts will be supplied as necessary.

DISCUSSION AND DECISION

I. Personal Jurisdiction

Bankmark contends that the trial court erred in denying its motion to dismiss for lack of personal jurisdiction. Specifically, Bankmark argues that the trial court did not have the authority under T.R. 37(B)(2)(b) to prohibit it from maintaining its motion to dismiss as a sanction for failing to comply with the trial court's discovery order. Alternatively, Bankmark argues that even if T.R. 37 permits the dismissal of a claim, the trial court's imposition of the sanction in the present case was an abuse of discretion.

Initially, we note our standard of review. Here, the record reveals that the trial court entered special findings of fact and conclusions of law on its own motion. When the trial court has entered findings on its own motion, the specific findings control only as to the issues they cover and the general judgment controls as to the issues upon which the court has not made findings. Ford v. Peoples Trust and Savings Bank, 651 N.E.2d 1193, 1194 (Ind.Ct.App.1995), trans. denied. The specific findings will not be set aside unless they are clearly erroneous and we will affirm the general judgment on any legal theory supported by the evidence. Id. A finding is clearly erroneous when there are no facts or inferences drawn therefrom which support it. In the Matter of M.B., 666 N.E.2d 73, 76 (Ind.Ct.App.1996), trans. denied. A judgment is clearly erroneous when it is not supported by the findings of fact or the conclusions relying on those findings. Estate of Reasor v. Putnam County, 635 N.E.2d 153, 158 (Ind.1994). In reviewing the trial court's findings, we neither reweigh the evidence nor judge the credibility of the witnesses; rather, we consider only the evidence and reasonable inferences drawn therefrom which support the verdict. Coffin v. Hollar, 626 N.E.2d 586, 589 (Ind.Ct.App.1993).

Additionally, we note that Bankmark had the burden of proving the trial court's lack of personal jurisdiction. Fidelity Financial Services, Inc., v. West, 640 N.E.2d 394, 396 (Ind.Ct.App.1994). Thus, Bankmark is appealing from a negative judgment. To prevail on an appeal from a negative judgment, a party must establish that the evidence is without conflict and leads only to a result opposite that reached by the trial court. Matter of Estate of Borom, 562 N.E.2d 772, 773-74 (Ind.Ct.App.1990).

A. Authority Under Trial Rule 37

We first address Bankmark's contention that the trial court could not assert personal jurisdiction over it as a T.R. 37(B)(2) sanction for failing to comply with its discovery order. Specifically, Bankmark contends that, absent a finding that it had waived its jurisdictional objection or that it had sufficient "minimum contacts" with the State of Indiana, the trial court did not have the power to impose a sanction on Bankmark.

It is axiomatic that an Indiana court must have personal jurisdiction over a defendant in order to render a valid judgment against a defendant. Freemond v. Somma, 611 N.E.2d 684, 687 (Ind.Ct.App.1993), trans. denied. As a general rule, in order to establish personal jurisdiction, the evidence must show that the defendant has sufficient minimum contacts with the forum State such that it has purposefully availed itself of the State's laws, Tietloff v. Lift A-Loft Corp., 441 N.E.2d 986, 989 (Ind.Ct.App.1982), or that the defendant has consented or waived its objection to jurisdiction. Mechanics Laundry & Supply, Inc. v. Wilder Oil Co., Inc., 596 N.E.2d 248, 251 (Ind.Ct.App.1992), trans. denied; Schneider v. Schneider, 555 N.E.2d 196, 199 (Ind.Ct.App.1990).

However, the United States Supreme Court has addressed another method by which trial courts may acquire personal jurisdiction. In Insurance Corp. of Ireland, Ltd., et al. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982), the Court held that a district court had the authority, pursuant to Federal Rule 37(b)(2)(A), to presume that personal jurisdiction over a party had been established as a result of that party's failure to comply with a discovery order. In reaching its decision, the Court explained that personal jurisdiction, unlike subject matter jurisdiction, is not a limitation on the sovereignty of the judicial branch, but rather is a restriction on judicial power as a matter of individual liberty. Id. at 702, 102 S.Ct. at 2104. As an individual liberty interest, personal jurisdiction, like other individual rights, is subject to procedural rules and a party may intentionally waive or be estopped from asserting such a right. Id. at 704, 706, 102 S.Ct. at 2105, 2106. The Court then explained that by submitting to the jurisdiction of ...