Tietloff v. Lift-A-Loft Corp.

• Decision Date: 23 November 1982
• Docket Number: No. 2-881A280,LIFT-A-LOFT,2-881A280
• Parties: Randy TIETLOFF, Appellant (Plaintiff Below), v.CORPORATION, Appellee (Defendant Below), Randell Corporation, Nominal Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 986

441 N.E.2d 986

Randy TIETLOFF, Appellant (Plaintiff Below), v. LIFT-A-LOFT CORPORATION, Appellee (Defendant Below),

Randell Corporation, Nominal Appellee (Plaintiff Below).

No. 2-881A280.

Court of Appeals of Indiana,

Second District.

Nov. 23, 1982.

Stan G. Wyrick, Muncie, for appellant.

J. David Haynes, Dennis, Raisor, Wenger & Haynes, P.C., Muncie, for appellee.

SULLIVAN, Judge.

Randy Tietloff, plaintiff below, ¹ appeals an adverse judgment in his action to enforce an Arkansas default judgment against Lift-A-Loft Corporation (Lift-A-Loft), defendant below. The only issue presented is whether the trial court erred in determining that the Arkansas state court lacked personal jurisdiction over Lift-A-Loft.

The facts of record are simple and substantially without conflict. In 1975, Tietloff, an Arkansas resident, contacted Bob Duncan, then vice-president in charge of the equipment division of Lift-A-Loft, an Indiana corporation, in an effort to interest the corporation in manufacturing Tietloff's invention, a side-loader fork lift. Negotiations ensued. In the process, Duncan went to West Memphis, Arkansas to meet with Tietloff and his associates. They discussed arrangements for picking up the fork lift from North Little Rock, Arkansas. Before his departure, Duncan entered into an oral agreement with Tietloff which included the obligation to return the machine in good condition. The agreement was entered into either in West Memphis, Arkansas or across the river in Memphis, Tennessee. Duncan sent Paul J. Rummel, an assistant sales manager of Lift-A-Loft, to meet with Tietloff in Little Rock, Arkansas and to look at the fork lift there. After his return to Indiana, Duncan sent a letter to Tietloff confirming their arrangement and agreeing to send one of Lift-A-Loft's trucks to Little Rock to pick up the fork lift. Duncan did in fact send a Lift-A-Loft employee and a truck to Arkansas to transport the fork lift to Indiana for evaluation.

Tietloff came to Indiana to demonstrate the machine to the officers of Lift-A-Loft. Thereafter, the parties learned that Tietloff had not as yet obtained a patent on the machine. Lift-A-Loft kept the fork lift for approximately three years awaiting issuance of a patent. The corporation stored it outside. Some parts were allegedly removed from the fork lift for evaluation and never returned. Vandals allegedly removed other parts. Finally, in 1978, Lift-A-Loft returned the fork lift to Tietloff in Arkansas. Lift-A-Loft paid for the shipping.

Tietloff brought suit against Lift-A-Loft in an Arkansas state court, alleging inter alia that as a part of the oral agreement of the parties, Lift-A-Loft was obligated to return the fork lift in good condition and that Lift-A-Loft had breached this agreement by causing or permitting damage to occur to the side-loader fork lift while it was in the care and possession of Lift-A-Loft. ² Service of summons was made upon Lift-A-Loft, but Lift-A-Loft failed to defend the action. A default judgment was entered against it in the amount of $4,381.37.

Tietloff then brought suit on the Arkansas judgment in Indiana. Lift-A-Loft defended on the ground, among others, that the Arkansas court lacked personal jurisdiction over it and that, therefore, the Arkansas judgment was invalid. The trial court granted Lift-A-Loft's motion for judgment on the pleadings, ³ finding that the Arkansas state court lacked jurisdiction over Lift-A-Loft because of insufficient contacts between it and the State of Arkansas.

Initially we note that Lift-A-Loft asserts lack of personal jurisdiction as a collateral attack on the validity of the Arkansas default judgment. See Restatement (Second) of Judgments Sec. 81 (1982). Indiana law requires the defendant to bear the burden of proof on affirmative defenses, including lack of jurisdiction over his person. Ind. Rules of Procedure, Trial Rule 8(C). See also Weenig v. Wood (2d Dist.1976) 169 Ind.App. 413, 349 N.E.2d 235; Podgorny v. Great Central Insurance Co. (3d Dist.1974) 160 Ind.App. 244, 311 N.E.2d 640. Compare R. Leflar, American Conflicts Law Secs. 121, 124 (3d ed. 1977); Restatement (Second) of Conflicts of Law Secs. 122, 133 (1971) (Matters of procedure, including placement of the burden of proof, are generally governed by the law of the forum in which relief is sought.) Therefore, Lift-A-Loft bore the burden to demonstrate by a preponderance of the evidence that it had insufficient contacts with Arkansas to support the Arkansas court's assertion of personal jurisdiction over it. We hold that Lift-A-Loft failed to meet that burden.

Generally, in analogous circumstances, the jurisdictional determination requires a two-step analysis. First, it must be determined whether the particular long-arm statute authorizes the exercise of jurisdiction over the defendant; and second, if the defendant's activities are embraced within the statute, it must be determined whether the state's exercise of in personam jurisdiction over the defendant offends the due process clause of the 14th Amendment. See Woods, The Far Side of Jurisdiction, 22 Ark.L.Rev. 627 (1969).

The relevant portion of the Arkansas long-arm statute, Ark.Stat.Ann. Sec. 27-2502, provides:

"C. ...

1. A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a (cause of action) (claim for relief) arising from the person's

(a) transacting any business in this State;

* * *

* * *

2. When jurisdiction over a person is based solely upon this section, only a (cause of action) (claim for relief) arising from acts enumerated in this section may be asserted against him.

D. Service outside the State. When the exercise of personal jurisdiction is authorized by this section, service may be made outside this State."

A study of Arkansas precedent reveals that the purpose of the long-arm statute is to permit the exercise of jurisdiction over non-residents to the extent permitted by the due process clause. See Pennsalt Chemical Corp. v. Crown Cork & Seal Co., Inc. (1968) 244 Ark. 638, 426 S.W.2d 417; Safeway Stores, Inc. v. Shwayder Bros., Inc. (1964) 238 Ark. 768, 384 S.W.2d 473. See also Thompson v. Ecological Science Corp. (8th Cir.1970) 421 F.2d 467; Martin v. Kelley Electric Co. (E.D.Ark.1974) 371 F.Supp. 1225; Arkansas-Best Freight System, Inc. v. Youngblood (W.D.Ark.1973) 359 F.Supp. 1115. Accordingly, we need not perform the two-part analysis. Rather, we engage in a "single search for the outer limits of what due process permits." Oddi v. Mariner-Denver, Inc. (S.D.Ind.1978) 461 F.Supp. 306, 308.

To exercise jurisdiction consonant with due process over a non-resident defendant, "certain minimum contacts" must exist between the non-resident defendant and the forum "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co. v. Washington (1945) 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 quoting Milliken v. Meyer (1940) 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278. 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. Rather, it depends upon the quality and nature of the defendant's activity in relation to the matter under litigation. Hutson v. Fehr Bros. (8th Cir.1978) 584 F.2d 833 (construing Arkansas law). The facts of each case must be weighed. 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 protections of its laws." Hanson v. Denckla (1958) 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283. The inquiry focuses not only upon the quantity, quality and nature of the defendant's activities but also upon the relationship of those activities and the forum. Rush v. Savchuk (1980) 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516; Kulko v. California Superior Court (1978) 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132; Shaffer v. Heitner (1977) 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683. The focus is on the defendant's activities within the forum state, not on those of the plaintiff. World Wide Volkswagen v. Woodson (1980) 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490.

The factors to be considered in determining whether fair play and substantial justice standards have been met may be summarized as follows: (1) The nature and quality of the contacts with the forum state; (2) the quantity of contacts with the state; (3) the relationship between those contacts and the cause of action; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties. See Aftanase v. Economy Baler Co. (8th Cir.1965) 343 F.2d 187, 197. The first three are the primary factors in determining whether International Shoe standards are met. Id.

The facts here reveal at least two instances in which an agent of Lift-A-Loft entered the state of Arkansas to negotiate the underlying contract and to examine the fork lift. The contract itself was entered into either in Arkansas or Tennessee but, in any event, not in Indiana. There were also other contacts with Arkansas, including Duncan's sending a letter to Tietloff confirming the arrangement to pick up the fork lift. In addition, an employee of Lift-A-Loft hauled the fork lift from Arkansas to Indiana. Lift-A-Loft also paid for its return shipment to Arkansas.

In Wichman v. Hughes (1970) 248 Ark. 121, 450 S.W.2d 294, a non-resident defendant sent an agent into Arkansas to buy horses from the plaintiff. Thereafter, the defendant sent a van into Arkansas to pick up the horses, giving the plaintiff a check for the purchase price. That check was dishonored, apparently because the defendant stopped payment on it. The court held that these contacts were sufficient to confer personal jurisdiction over the...