Freemond v. Somma

• Decision Date: 06 April 1993
• Docket Number: No. 24A01-9205-CV-123,24A01-9205-CV-123
• Citation: 611 N.E.2d 684
• Court: Indiana Appellate Court
• Parties: Alan S. FREEMOND and Clarajohn H. Freemond, Appellants-Plaintiffs, v. Charles A. SOMMA, Jr., Alexander B. McMurtrie, Jr., Margaret H. McMurtrie, Somma & McMurtrie, P.C., a Virginia Professional Corporation, and George M. Hillenbrand, II, Appellees-Defendants.

Page 684

611 N.E.2d 684

Alan S. FREEMOND and Clarajohn H. Freemond, Appellants-Plaintiffs, v.Charles A. SOMMA, Jr., Alexander B. McMurtrie, Jr., Margaret H. McMurtrie, Somma & McMurtrie, P.C., a Virginia Professional Corporation, and George M Hillenbrand, II, Appellees-Defendants.

No. 24A01-9205-CV-123.

Court of Appeals of Indiana First District.

April 6, 1993.

Rehearing Denied June 11, 1993.

Thomas E. Atz, Samper, Hawkins, Atz & Cook, Indianapolis, Daniel A. Gecker, Maloney, Yeatts & Barr, Richmond, VA, for appellants-plaintiffs.

Michael R. Hartman, Karl L. Mulvaney, Nana Quay-Smith, Bingham, Summers, Welsh & Spilman, Indianapolis, for appellees-defendants.

BAKER, Judge.

Plaintiff-appellants Alan S. and Clarajohn H. Freemond(the Freemonds) appeal the dismissal of their action against defendant-appelleesCharles A. Somma, Jr., Alexander B. McMurtrie, Jr., Margaret H. McMurtrie, Somma & McMurtrie, P.C., a Virginia Professional Corporation(collectively, the "nonresident defendants"), and George M. Hillenbrand, II.The Franklin Circuit Court dismissed the action against the nonresident defendants¹ after concluding it did not have personal jurisdiction and Virginia was a more convenient forum to resolve the litigation.

The Freemonds raise two issues for our review, which we restate as:

I.Whether the trial court erred when it dismissed the complaint for lack of personal jurisdiction.

II.Whether the trial court erred when it concluded Virginia was a more convenient forum to resolve the litigation.

FACTS

The Freemonds initiated this action against the nonresident defendants and Hillenbrand in the Franklin Circuit Court on December 6, 1990, following an investment deal gone bad.Although the Freemonds reside in Indiana, their complaint sought compensatory and punitive damages for a variety of alleged acts or omissions regarding the creation, management, and dissolution of a limited partnership in Virginia known as the Williamsburg Suites, Ltd.The Freemonds apparently lost a great deal of money on the partnership's primary business venture, a hotel in Williamsburg, Virginia.

With the exception of Hillenbrand, who resides in Indiana, all of the named defendants are Virginia residents or, in the case of Somma & McMurtrie, P.C., a Virginia professional corporation engaged in the practice of law in Virginia.After being served with the Freemonds' complaint, the nonresident defendants filed a motion to dismiss in which they challenged Indiana's personal jurisdiction and, in the alternative, argued Virginia was a more convenient forum for the litigation.Both sides produced numerous affidavits and extensive deposition testimony describing the nonresident defendants' contacts with Indiana.

The record reveals the nonresident defendants first solicited the Freemonds' participation in the limited partnership by forwarding information about the project to the Freemonds' Indiana home in November 1985.That same year, the McMurtries spent Christmas with the Freemonds at a family gathering in Indiana, ² at which time the limited partnership was discussed.The nonresident defendants sent the limited partnership agreement to the Freemonds' Indiana address, and the Freemonds executed the agreement in Indiana sometime after January 17, 1986.Within one month of signing the agreement, the Freemonds and the nonresident defendants again gathered in Indiana, at which time they discussed the partners' exposure and financing.Thereafter, the nonresident defendants continued to communicate with the Freemonds in Indiana about Williamsburg Suites, Ltd., both through written correspondence and telephonically.

The Williamsburg Suites hotel was not a financial success.Despite attempts to save the business, the limited partnership was unable to meet its financial obligations.Eventually, the Freemonds filed this action in Indiana for events connected to the failed partnership.Through a motion to dismiss, the nonresident defendants challenged Indiana's personal jurisdiction and the convenience of the forum.The trial court agreed with both challenges, and dismissed the action.The Freemonds now appeal the dismissal.

DISCUSSION AND DECISION

I

Personal Jurisdiction

(a) Standard of Review

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.Ryan v. Chayes Virginia (1990), Ind.App., 553 N.E.2d 1237, 1239, trans. denied.A party challenging the court's personal jurisdiction must prove its challenge by a preponderance of the evidence unless lack of jurisdiction is apparent on the face of the complaint.Mid-States Aircraft Engines v. Mize Co. (1984), Ind.App., 467 N.E.2d 1242, 1247.We have said the decision to grant a motion to dismiss based on lack of in personam jurisdiction lies within the trial court's sound discretion.Ryan, supra, at 1239.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.

(b) Due Process Considerations

In this case, the Freemonds challenge the trial court's conclusion it did not have personal jurisdiction over the nonresident defendants.

Ind.Trial Rule 4.4, Indiana's "long-arm"statute, provides, in relevant part:

(A) Acts serving as a basis for jurisdiction.Any person or organization that is a nonresident of this state ... submits to the jurisdiction of [Indiana]courts as to any action arising from the following acts committed by him or his agent:

(1) Doing 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 the 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[.]

The purpose of T.R. 4.4(A) is to extend jurisdiction to the boundaries permitted by the due process clause of the 14th Amendment to the United States Constitution.Fetner v. Maury Boyd & Assoc., Inc. (1990), Ind.App., 563 N.E.2d 1334, 1336, trans. denied.The Supreme Court has interpreted due process as requiring certain "minimum contacts" between the defendant and the state before jurisdiction may be exercised.International Shoe Co. v. Washington(1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.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(citations omitted).

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 activity 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, 2183, 85 L.Ed.2d 528, 542(citations omitted).The focus is on the defendant's activities within the forum state, not on the plaintiff's activities.World-Wide Volkswagen, supra, 444 U.S. at 297, 100 S.Ct. at 567, 62 L.Ed.2d at 501.

The Freemonds argue that pursuant to T.R. 4.4(A)(1), the trial court had jurisdiction over the nonresident defendants because the nonresident defendants were doing business in Indiana.Specifically, they allege the nonresident defendants had the following summarized relevant "minimum contacts" with the State of Indiana:

(1) The McMurtries first solicited the Freemonds' participation in Williamsburg Suites in November 1985, when they forwarded information about the project to the Freemonds' home in Indiana;

(2) In December 1985, the Freemonds and the McMurtries discussed Williamsburg Suites at an annual family Christmas gathering in Indiana at which time the final decision to proceed with the Williamsburg Suites was made;

(3) After the Freemonds and McMurtries reached an oral agreement in Indiana, and while McMurtrie was still in Indiana, McMurtrie telephoned Somma in Virginia and instructed him to finalize the limited partnership agreement and related documents;

(4) Somma and McMurtrie forwarded the Williamsburg Suites Partnership Agreement to Dr. Freemond in Indiana, and Dr. Freemond executed the document in Indiana on or around January 17, 1986;

(5) In February 1986, the McMurtries, Somma, and...