Fidelity Financial Services, Inc. v. West

• Decision Date: 15 September 1994
• Docket Number: No. 10A01-9404-CV-126,10A01-9404-CV-126
• Citation: 640 N.E.2d 394
• Parties: FIDELITY FINANCIAL SERVICES, INC. and Admiral Life Insurance Company of America, Appellants-Defendants, v. Lewis WEST and Teresa West, Appellee-Plaintiffs.
• Court: Indiana Appellate Court

Page 394

640 N.E.2d 394

FIDELITY FINANCIAL SERVICES, INC. and Admiral Life Insurance Company of America, Appellants-Defendants, v. Lewis WEST and Teresa West, Appellee-Plaintiffs.

No. 10A01-9404-CV-126.

Court of Appeals of Indiana First District.

Sept. 15, 1994.

William E. Smith, III, Hanger, Engebretson, Mayer & Vogt, Clarksville, Kenneth R. Taurman, Jr., Tackett, Taurman & Sonne, P.C., New Albany, for appellants.

C. Gregory Fifer, Voelker Law Office, Jeffersonville, for appellees.

NAJAM, Judge.

STATEMENT OF THE CASE

Fidelity Financial Services, Inc. ("Fidelity") and Admiral Life Insurance Company of America ("Admiral") bring this interlocutory appeal from the trial court's order denying their motion to dismiss the complaint of Lewis and Teresa West (the "Wests"). ¹ The Wests filed their complaint to establish liability on a credit disability insurance policy issued by Admiral as a condition of a loan between the Wests and Fidelity. In order to secure the loan, the Wests granted Fidelity a second mortgage on their home in Indiana. Thereafter, Fidelity and Admiral filed a motion to dismiss the Wests' complaint. The trial court denied Fidelity and Admiral's motion to dismiss but found that Fidelity had not been properly served. Fidelity and Admiral appeal and assert the trial court erred when it denied their motion to dismiss because, with regard to Fidelity, the trial court lacks personal jurisdiction and, with regard to Admiral, a more convenient forum exists. On cross-appeal, the Wests assert the trial court erred when it found that their service of process on Fidelity was insufficient.

We affirm in part, reverse in part and remand.

ISSUE

We restate the issues presented on appeal as:

1. Whether the trial court erred when it denied Fidelity and Admiral's motion to dismiss the Wests' complaint.

2. Whether the trial court erred when it found the Wests' service of process on Fidelity was insufficient to confer jurisdiction.

FACTS

On December 4, 1992, the Wests, who resided in Clark County, Indiana, went to Fidelity's office in Louisville, Kentucky, to apply for additional credit on a pre-existing loan. As a condition of the new loan, Fidelity required the Wests to obtain both a credit disability insurance policy and a joint credit life insurance policy from Admiral. Admiral's credit disability policy provided for a monthly benefit equal to the Wests' monthly loan payment to Fidelity, in the event Lewis West became disabled. That same day, at Fidelity's office, the Wests executed a promissory note with Fidelity and purchased the insurance coverage from Admiral. In addition, Fidelity required the Wests to execute a security agreement and to grant Fidelity a second mortgage on the Wests' home in Sellersburg to secure the loan. The mortgage was properly recorded in Clark County.

Shortly after the policies were issued, Lewis West became disabled. On February 8 and March 1, 1993, the Wests submitted claims on the credit disability policy for payment of benefits. Both claims were rejected by Admiral on the grounds that Lewis' disability was not covered by the policy. Admiral then notified Fidelity of its decision to reject the Wests' insurance claims.

The Wests brought suit against Fidelity and Admiral in the Clark Superior Court and alleged bad faith and the negligent practice of insurance. The Wests served Fidelity at its Louisville office "c/o Highest Executive Officer" and also served "Fidelity Financial Services, Inc., c/o William Thompson, Registered Agent, Indianapolis, Indiana." Record at 12 and 14. Both offices executed the Fidelity and Admiral filed a motion to dismiss the Wests' complaint under Trial Rule 12(B) and alleged the following defenses: insufficient service of process, lack of personal jurisdiction, inconvenient forum and improper venue. After a hearing, the trial court entered an order denying their motion which stated in pertinent part:

certified mail return receipt; however, there was no return of service on Fidelity's Kentucky resident agent.

[T]he Court having now heard all the evidence and being duly advised in the premises, now FINDS as follows:

1. That the Defendant's Motion to Dismiss is hereby denied;

2. That the Court finds it has subject matter jurisdiction over the allegations contained in the Complaint;

3. That pursuant to Trial Rule 4.4 the Clark Superior Court Number 2 is the preferred venue for the above-styled cause of action;

4. That the Defendant, Fidelity Financial Services, Inc., a Kentucky Corporation, has not been properly served as of the date of this hearing, and therefore, there is presently no jurisdiction over said Defendant.

Record at 76-77. Fidelity and Admiral filed their petition for certification of interlocutory appeal with the trial court, which was granted, and then filed their petition to file an interlocutory appeal with this court, which we accepted. We will state additional facts where necessary.

DISCUSSION AND DECISION

Issue One: Motion to Dismiss

Fidelity and Admiral contend the trial court erred when it denied their motion to dismiss the Wests' complaint. Specifically, they assert the Wests' complaint must be dismissed because, even if Fidelity were properly served, the Clark Superior Court lacks personal jurisdiction. In other words, they argue Fidelity is a Kentucky corporation without sufficient "minimum contacts" with Indiana. In addition, while Fidelity and Admiral concede that the trial court has personal jurisdiction over Admiral, they maintain the Wests' complaint should be dismissed because a more convenient forum exists in which to bring this action. ² We disagree with both contentions.

A. Personal Jurisdiction

"It is axiomatic that an Indiana court must have personal jurisdiction over a defendant in order to render a valid personal judgment against that defendant." Freemond v. Somma (1993), Ind.App., 611 N.E.2d 684, 687, trans. denied. In Indiana, jurisdiction is presumed and need not be alleged. Ind.Trial Rule 8(A). A party challenging jurisdiction must establish it by a preponderance of the evidence unless lack of jurisdiction is apparent on the face of the complaint. Alberts v. Mack Trucks, Inc. (1989), Ind.App., 540 N.E.2d 1268, 1270, trans. denied. The decision whether to grant a motion to dismiss based on lack of personal jurisdiction lies within the trial court's sound discretion. Freemond, 611 N.E.2d at 687. "As with any fact-finding entrusted to the trial court, it is within the trial court's sound discretion to decide the jurisdictional facts. Once the court has decided those facts, however, whether in personam jurisdiction exists is a question of law." Id.

In determining whether an Indiana court has personal jurisdiction over a nonresident defendant, we use a two-step analysis: (1) whether the Indiana long-arm statute authorizes the exercise of jurisdiction over the nonresident, and (2) whether the exercise of personal jurisdiction pursuant to the long-arm statute violates the nonresident's due process rights under the Fourteenth Amendment to the United States Constitution. Reames v. Dollar Sav. Ass'n (1988), Ind.App. 519 N.E.2d 175, 176; see Showtime Game Brokers, Inc. v. Blockbuster Video, Inc. (1993), S.D.Ind., 151 F.R.D. 641, 648.

Indiana's "long-arm" statute provides, in relevant part, as follows:

(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 to any action arising from the following acts committed by him or his agent:

* * * * * *

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

Ind.Trial Rule 4.4(A). The purpose of Trial Rule 4.4(A) is to extend jurisdiction to the boundaries permitted by the due process clause of the Fourteenth Amendment. Fetner v. Maury Boyd & Associates, Inc. (1990), Ind.App., 563 N.E.2d 1334, 1336, trans. denied; Showtime Game Brokers, 151 F.R.D. at 648.

The United States Supreme Court has interpreted due process as requiring certain "minimum contacts" between the defendant and the state before personal jurisdiction may be exercised by a court of that state. International Shoe Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. Further, the Supreme Court has held that the defendant's contacts with the forum state must be such that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." Id. at 316, 66 S.Ct. at 158, 90 L.Ed. at 102.

In Freemond, we described the required due process analysis as follows:

A mechanical or quantitative evaluation of a defendant's activities in a state cannot resolve the question of the reasonableness of the exercise of personal jurisdiction. Whether exercising personal jurisdiction is reasonable depends upon the quality and nature of the defendant's activities in relation to the matter under litigation. The critical inquiry is whether the defendant's conduct and connection with the forum are such that the defendant should reasonably anticipate being hauled into the distant forum court. World-Wide Volkswagen Corp. v. Woodson (1980), 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490, 498. At a minimum, the court must find 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws.' Hanson v. Denckla (1958), 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, 1298. The 'purposeful availment' requirement ensures that a defendant will not be hauled into a jurisdiction solely on the basis of 'random, fortuitous or attenuated contacts or the unilateral activity of another party or a third person who claims some relationship with him.' Burger King v. Rudzewicz (1985), 471 U.S. 462, 474-75, 105 S.Ct. 2174,...