Micro Experts, Inc. v. Edison Technologies, Inc.

• Decision Date: 18 August 1997
• Docket Number: No. 71822,71822
• Citation: 701 N.E.2d 1033,122 Ohio App.3d 394
• Parties: MICRO EXPERTS, INC., Appellant, v. EDISON TECHNOLOGIES, INC. et al., Appellees. *
• Court: Ohio Court of Appeals

Page 394

122 Ohio App.3d 394

701 N.E.2d 1033

MICRO EXPERTS, INC., Appellant, v. EDISON TECHNOLOGIES, INC. et al., Appellees. ^*

No. 71822.

Court of Appeals of Ohio Eighth District, Cuyahoga County.

Decided Aug. 18, 1997.

Kraus & Kraus, and Keith R. Kraus, Cleveland, for appellant.

Brouse & McDowell, and Linda B. Kersker, Akron, for appellee First National Bank of Ohio.

Hahn, Loeser & Parks, and Neil K. Evans, Cleveland, for appellee Wells Fargo Bank.

ROCCO, Judge.

In this action to recover funds paid out from a checking account, plaintiff-appellant Micro Experts, Inc. appeals from two trial court orders that had the effect of determining the action in appellees' favor. The first order granted third-party defendant-appellee Wells Fargo Bank's ("Wells Fargo's") motion to dismiss it from the action for lack of personal jurisdiction. The second order granted defendant-appellee First National Bank of Ohio's ("First National's") motion for summary judgment. This court has reviewed the record and determines that the trial court's actions were appropriate; therefore, its orders are affirmed.

Appellant is a company in the business of selling computers. In January 1994, it purchased some equipment from one of its suppliers, Edison Technologies, Inc. ("Edison"). To pay for the merchandise, appellant's vice-president of finance, Lolita Iskiev, issued a total of four company checks payable to Edison. Three of them, numbered "2525," "2526," and "2527," were in the amount of $50,000. These checks were all handwritten and were postdated "2-23-94," "2-28-94," and "3-5-94," respectively.

After the arrival of Edison's merchandise, appellant experienced problems with it. Therefore, on January 19, 1994, appellant notified its banking institution, appellee First National, that it wanted to stop payment on the four checks issued to Edison. First National's employee recorded appellant's stop payment order information on a "stop payment card." The information was then placed into the bank's central computer system, where it remained for one hundred eighty days. Appellant then negotiated with Edison regarding its dissatisfaction with the order.

In March 1994, appellant resolved its difficulties with Edison over the equipment. Pursuant to their agreement, appellant issued a new check to cover the cost of the replacements. Edison assured appellant that the earlier checks had been voided, sending photocopies of them that indicated that they had been marked with that notation. However, appellant failed to obtain the originals of the earlier checks.

In late December, Edison deposited the earlier checks from appellant into its banking account with appellee Wells Fargo in Beverly Hills, California. Check numbers 2526 and 2527 at that time bore the dates "12-23-94" and "12-28-94."

Wells Fargo forwarded the checks for collection through the Federal Reserve Bank system. Since the stop-payment order had expired, upon receipt of the checks, First National paid check number 2525 on December 29, 1995 and check number 2526 on January 4, 1995 from appellant's account. First National also initially paid check number 2527 from appellant's account; however, it later recredited appellant's account for the amount, apparently because the check bore an obviously "stale" date. ¹

On March 28, 1995, appellant instituted an action against Edison and First National in the Cuyahoga County Court of Common Pleas. Appellant alleged Edison had "maliciously altered" the dates on check numbers 2525 and 2526 and appropriated the funds unlawfully.

As to First National, appellant alleged in its complaint that First National had breached its duty of "ordinary care" by "negligently" paying the checks "under circumstances in which it knew or should have known" that the checks had been "materially and fraudulently altered." Appellant further alleged that First National breached its duty of "ordinary care" by paying the checks "inasmuch as absent the material alteration" the checks were "stale and should not have been paid."

On May 4, 1995, First National filed an answer and a cross-claim against Edison for indemnity. Listed among First National's defenses was the assertion that appellant's claims were barred both by its failure to exercise ordinary care that "substantially contributed" to the alterations on the checks and by its failure to renew the stop-payment order. First National further asserted that it had conducted itself in accordance with reasonable commercial standards.

On the same day, First National also filed a third-party complaint against Wells Fargo, alleging breach of warranties pursuant to R.C. 1304.18. First National asserted that the trial court's jurisdiction over Wells Fargo was appropriate because its presentment to First National of the checks constituted the transacting of business in Ohio.

On May 23, 1995, appellant filed a motion for a default judgment against Edison. The motion was set for hearing in August 1995.

On June 30, 1995, without waiving the issue of personal jurisdiction, Wells Fargo filed an answer to the third-party complaint and a cross-claim against Edison for indemnification.

On September 15, 1995, the trial court granted appellant's motion for a default judgment against Edison. Subsequently, on October 12, 1995, with the trial court's permission, appellant filed a cross-claim against Wells Fargo. Appellant alleged, inter alia, the following: (1) Wells Fargo had no right to enforce payment on the checks; (2) Wells Fargo had notice that the checks were altered; and (3) Wells Fargo breached transfer and presentment warranties in transferring the checks. In the pleading, appellant made no assertion that the trial court had personal jurisdiction over Wells Fargo.

On December 8, 1995, Wells Fargo filed an answer to appellant's cross-claim, once again without waiving jurisdiction. Then, on December 14, 1995, Wells Fargo filed a formal motion to dismiss both First National's third-party complaint and appellant's cross-claim against it on the basis that the trial court lacked personal jurisdiction over Wells Fargo. The motion was supported by a brief and the affidavit of Mark O. Donohue, vice-president of the company.

In his affidavit, Donohue stated that (1) Wells Fargo had its principal place of business in California with no offices, retail branches, or employees located in Ohio; (2) Edison's checking account was in California; (3) Edison's checks were transferred through the Federal Reserve Bank System for collection and, therefore, Wells Fargo made no direct presentment of them to First National; (4) Wells Fargo had no correspondent relationship with First National; and (5) Wells Fargo neither transacted business in Ohio with respect to the matter nor caused injury in Ohio by breaching any warranty with respect to the sale of goods.

Subsequently, both First National and appellant filed responses to the motion with attached exhibits. The exhibits indicated that Wells Fargo in the past had filed financial statements in Ohio. Eventually, on May 22, 1996, the trial court granted Wells Fargo's motion and dismissed it from the action.

On November 15, 1996, First National filed a motion for summary judgment with respect to the remaining claims in the case. First National argued that appellant could not establish that it had been negligent, since appellant had failed to renew the stop-payment order on the checks and since the checks had been paid in good faith.

First National attached to its brief in support of the motion its responses to appellant's first request for admissions and interrogatories and the deposition testimony of the following: (1) Paulette Grizer, First National's fraud manager; (2) Igor Iskiev, appellant's president; and (3) Lolita Iskiev, appellant's vice-president of finance.

On November 27, 1996, appellant filed a brief in opposition to First National's motion for summary judgment. Appellant argued that by virtue of the original stop payment order, First National had actual notice that the checks had been altered by the time of presentment. Appellant also argued that an issue remained with regard to the allocation of negligence between the parties. Appellant attached no evidentiary material to its brief. In response, First National filed a reply brief.

Ultimately, the trial court granted First National's motion for summary judgment. It is from this final order that appellant filed its timely appeal, presenting two assignments of error for review.

Appellant's first assignment of error states:

"The trial court committed prejudicial and reversible error by dismissing all claims against third-party defendant-appellee Wells Fargo Bank for lack of personal jurisdiction."

Appellant argues that Wells Fargo's activities in this case with regard to the checks indicate that it has sufficient minimum contacts with Ohio to justify the trial court's exercise of personal jurisdiction over it; thus, the trial court improperly granted its motion to dismiss.

It must first be noted that in its cross-claim against Wells Fargo, appellant failed to make any allegation concerning the trial court's jurisdiction over Wells Fargo, personal or otherwise. In fact, only First National averred that Wells Fargo "transacted business" in Ohio. On this basis alone, the trial court was justified in dismissing appellant's cross-claim against Wells Fargo. Jurko v. Jobs Europe Agency (1975), 43 Ohio App.2d 79, 72 O.O.2d 287, 334 N.E.2d 478.

Furthermore, in order to invoke the in personam jurisdiction of the trial court over a foreign corporation, it is the plaintiff's responsibility to demonstrate that Ohio's "long-arm" statute and Civ.R. 4.3 confer jurisdiction. Universal Coach v. New York City Transit Auth., Inc. (1993), 90 Ohio App.3d 284, 287, 629 N.E.2d 28, 30; Giachetti v. Holmes (1984), 14 Ohio App.3d 306, 308, 14 OBR 371, 373, 471 N.E.2d 165, 167-168.

Thus, although the trial court is required both to view the...