Keesling v. Winstead
| Decision Date | 21 December 2006 |
| Docket Number | No. 18A02-0601-CV-73.,18A02-0601-CV-73. |
| Citation | 858 N.E.2d 996 |
| Parties | Linda KEESLING, Harold Lephart and Priscilla Lephart, Hagar Anderson, James Bridges, Earl and Evelyn Haibe, Escar App, Mabel McGuffey, Ruth Amick, and Dora Butrum, Appellants-Plaintiffs, v. David G. WINSTEAD and James Leone, Appellees-Defendants. |
| Court | Indiana Appellate Court |
Richard N. Bell, Arend J. Abel, Kelley J. Johnson, Cohen & Malad, LLP, Indianapolis, IN, Attorneys for Appellant.
Lester H. Cohen, Brian M. Pierce, DeFur Voran LLP, Muncie, IN, Attorneys for Appellee, David G. Winstead.
James R. Leone, New Smyrna Beach, FL, Appellee pro se.
Plaintiffs Linda Keesling, Harold and Priscilla Lephart, Hagar Anderson, James Bridges, Earl and Evelyn Haibe, Escar App, Mabel McGuffey, Ruth Amick, and Dora Butrum (collectively, "Appellants") appeal the trial court's orders granting final summary judgment in favor of defendants David G. Winstead and James Leone on the issue of personal jurisdiction. We affirm.
We restate Appellants' issues as follows:
I. Whether the trial court erred in granting summary judgment in favor of Winstead on the issue of personal jurisdiction; and
II. Whether the trial court erred in granting summary judgment in favor of Leone on the issue of personal jurisdiction.
A more detailed recitation of the facts giving rise to this appeal may be found in a companion case we decide today, Keesling v. Beegle, No. 18A04-0501-CV-10, 858 N.E.2d 980 (Ind.Ct.App. Dec. 21, 2006). For purposes of this opinion, we note that
in 1986, Paul Rubera founded Alpha Telcom, Inc. ("Alpha"), an Oregon company that sold, installed, and maintained telephones and business systems. S.E.C. v. Alpha Telcom, Inc., 187 F.Supp.2d 1250, 1254 (D.Or.2002). In 1997, Charles Tummino approached Rubera and suggested selling "payphones to individuals who would then enter into a service agreement with Alpha to install, service, and maintain the payphones." Id. Rubera consulted Alpha's attorney, Dan Lacy, who issued an opinion letter concluding that the arrangement would not constitute the sale of a security. Lacy sought an opinion from Florida attorney James Leone, who reached the same conclusion.
Id., at 982. Leone understood that his legal opinion Appellants' App. at 456 (Leone deposition). Leone's opinion addressed whether payphone sales constituted the sale of a security under the laws of Florida, Oregon, and the Eleventh and Ninth Circuits. Id. at 478.
In October 1998, American Telecommunications Company, Inc. ("ATC"), was created to market and sell the payphone program to investors.2 Leone allowed his opinion letter to be included in the manual provided to payphone program sales representatives. At the request of Ross Rambach,3 Leone also sent the opinion letter to individual sales representatives "who said I want to see it from an attorney." Appellants' App. at 465 (Leone's deposition). According to affidavits filed by Appellants in response to Leone's summary judgment motion, sales representatives showed Leone's opinion to several Appellants, who relied on the opinion in making their decision to invest in the payphone program between September 1999 and April 2001.4 Id. at 497, 500, 503, 506, 509, 512 (affidavits of Earl Haibe, James Bridges, Mabel McGuffey, Ruth Amick, Escar App, and Linda Keesling).5
At all relevant times, Winstead was either a vice president or general manager of Alpha and a resident of either Oregon, Utah, or Colorado. According to Winstead, "[t]he sale of the payphone program was separate and distinct from the installation, service, and maintenance of equipment[,]" for which he was responsible. Appellants' App. at 412 (supplemental affidavit). Payphone program sales representatives gave customers several documents to sign, including an Alpha telephone services agreement and an ATC telephone equipment purchase agreement. The telephone services agreement had several exhibits, including a telephone equipment list, a buyback election form, and monthly fees and disclosure forms. After the customer signed the documents, the sales representative mailed them to the home office in Oregon. Alpha then sent the customer a copy of the telephone services agreement bearing Winstead's stamped signature. ATC sent the customer a payphone purchase confirmation bearing Winstead's stamped signature as general manager.6
In 2000, as an employee of Alpha, Winstead traveled to Indiana to visit the facilities of Opticom, Inc., and to discuss the possible use of Opticom as an operator service provider for Alpha's telephone operations. In May 2001, the Indiana secretary of state issued a cease and desist order against Alpha, ATC, Rubera, Winstead, and others, instructing them to refrain "from conducting business as unregistered broker-dealers" and "from offering and/or selling unregistered securities[.]" Id. at 420.
In February 2002, several Appellants filed suit against Winstead and others (not including Alpha, which filed for bankruptcy, or Opticom), alleging violations of the Indiana Securities Act and the Indiana Corrupt Business Influence Act (RICO), as well as theft, conversion, and common law fraud. Winstead moved to dismiss the complaint. Appellants added Leone as a defendant in their first amended complaint in August 2002. Leone unsuccessfully sought removal to federal court and dismissal for lack of personal jurisdiction. In March 2003, Appellants filed a second amended complaint, which Winstead and Leone unsuccessfully sought to dismiss. In December 2003, Appellants filed a third amended complaint, which Winstead answered and Leone unsuccessfully sought to dismiss. In May 2004, Appellants filed a fourth amended complaint, which both Winstead and Leone unsuccessfully sought to dismiss. In May 2005, Appellants, Winstead, and Leone all filed motions for summary judgment addressing the issue of personal jurisdiction.7 Leone also requested that he be awarded attorney's fees and expenses and that Appellants' counsel be held in contempt. On August 5, 2005, the trial court issued orders granting summary judgment in favor of Winstead and Leone and denying Appellants' summary judgment motion. The trial court also denied Leone's request for fees, expenses, and contempt. Leone filed a motion to correct error as to this ruling, which the trial court denied.8 On March 3, 2006, the trial court certified its August 2005 orders as final appealable judgments pursuant to Indiana Trial Rule 56(C).
"Personal jurisdiction is the court's power to bring a person into its adjudicative process and render a valid judgment over a person." Brockman v. Kravic, 779 N.E.2d 1250, 1254 (Ind.Ct. App.2002). "The existence of personal jurisdiction over a defendant is a constitutional requirement to rendering a valid judgment, mandated by the Due Process Clause of the Fourteenth Amendment." Anthem Ins. Cos. v. Tenet Healthcare Corp., 730 N.E.2d 1227, 1237 (Ind.2000). Id. at 1231 (footnote admitted). Id. "It is within the trial court's sound discretion to decide the jurisdictional facts." Brockman, 779 N.E.2d at 1255. Id. (citations omitted).
Here, the trial court resolved the issue of personal jurisdiction via the parties' motions for summary judgment.
On appeal, the standard of review of a summary judgment motion is the same as that used in the trial court: summary judgment is appropriate only where the evidence shows there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Ind.Trial Rule 56(C). All facts and reasonable inferences drawn from those facts are construed in favor of the non-moving party. The review of a summary judgment motion is limited to those materials designated to the trial court. T.R. 56(H). We must carefully review decisions on summary judgment motions to ensure that the parties were not improperly denied their day in court.
Tom-Wat, Inc. v. Fink, 741 N.E.2d 343, 346 (Ind.2001) (some citations omitted). A trial court's grant of summary judgment is clothed with a presumption of validity, and the appellant bears the burden of demonstrating that the trial court erred. Cox v. NIPSCO, 848 N.E.2d 690, 695 (Ind.Ct.App.2006). "Where a trial court enters specific findings and conclusions, they offer insight into the rationale for the trial court's judgment and facilitate appellate review, but are not binding upon this court." Id.
As our supreme court explained in Anthem,
Any discussion of personal jurisdiction in Indiana must first start with Trial Rule 4.4(A), Indiana's equivalent of a "long-arm statute." This trial rule provides a limit on the exercise of jurisdiction over nonresident defendants. There are two types of long-arm statutes: (1) those which direct the court to exercise jurisdiction to the extent...
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