Harry Kaufmann Motorcars, Inc. v. Schumaker Performance, Inc. ( 2012 )


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  •                                                               FILED
    FOR PUBLICATION
    Mar 16 2012, 9:17 am
    CLERK
    of the supreme court,
    court of appeals and
    tax court
    ATTORNEY FOR APPELLANT:                      ATTORNEY FOR APPELLEE:
    JOHN W. MERVILDE                             MYRON A. RAHN III
    Meils Thompson Dietz & Berish                Brand & Morelock
    Indianapolis, Indiana                        Greenfield, Indiana
    IN THE
    COURT OF APPEALS OF INDIANA
    HARRY KAUFMANN MOTORCARS, INC.,              )
    )
    Appellant-Plaintiff,                   )
    )
    vs.                             )      No. 41A05-1108-MI-411
    )
    SCHUMAKER PERFORMANCE, INC.,                 )
    )
    Appellee-Defendant.                    )
    APPEAL FROM THE JOHNSON SUPERIOR COURT
    The Honorable Lance D. Hamner, Judge
    Cause No. 41D03-1010-MI-49
    March 16, 2012
    OPINION - FOR PUBLICATION
    BRADFORD, Judge
    Appellant-Plaintiff Harry Kaufmann Motorcars, Inc. (“HKM”) appeals the trial court‟s
    decision to set aside a foreign judgment rendered in the State of Wisconsin against Appellee-
    Defendant Schumaker Performance, Inc. (“Schumaker”) as void for lack of personal
    jurisdiction. Concluding that the Wisconsin court had personal jurisdiction over Schumaker,
    we reverse and remand the matter to the trial court for future proceedings consistent with this
    opinion.
    FACTS AND PROCEDURAL HISTORY
    On or about September 21, 2006, a representative of HKM, a foreign corporation
    organized and operated under the laws of the State of Wisconsin, initiated communication
    with Schumaker by way of electronic mail in response to an online database listing for a boat
    that was posted by Schumaker. As a result of this communication, Schumaker sent the
    representative of HKM tickets to the upcoming Indianapolis Boat, Sport, and Travel Show
    (the “Boat Show”). While at the Boat Show, HKM and Schumaker entered into a purchase
    agreement under which Schumaker would sell an Eliminator boat (the “Boat”) to HKM. At
    this time, HKM paid Schumaker a $9000 down payment for the Boat.
    On April 18, 2007, representatives for Schumaker delivered the Boat to HKM in
    Wisconsin, at which time Schumaker accepted final payment for the Boat. After the initial
    delivery of the Boat, a representative of Schumaker came to Wisconsin to pick up the Boat
    and take it back to Indiana to conduct repairs. The representative of Schumaker later
    returned the Boat to HKM in Wisconsin.
    On July 30, 2009, HKM filed suit against Schumaker and co-defendant Eliminator
    2
    Custom Boats, Inc. in Dane County, Wisconsin, alleging breach of contract and warranty
    claims relating to the sale of the Boat. Schumaker was served with process in Indiana, but
    declined to appear and informed the Wisconsin court of its intent by letter on November 4,
    2009. On June 30, 2010, the Wisconsin court entered default judgment against Schumaker
    and Eliminator Custom Boats, Inc., in the amount of $436,651.71.
    On October 25, 2010, HKM filed its complaint to domesticate foreign judgment in the
    trial court. Schumaker filed a motion to dismiss on December 29, 2010. HKM filed a brief
    in opposition to the motion to dismiss and a motion for summary judgment on January 28,
    2011. On May 10, 2011, the trial court granted Schumaker‟s motion to dismiss. HKM
    subsequently filed a motion to correct error on June 9, 2011. On July 18, 2001, the trial court
    issued an amended order granting Schumaker‟s motion to dismiss. This appeal follows.
    DISCUSSION AND DECISION1
    HKM contends that the trial court erroneously denied full faith and credit to the
    judgment rendered by the Wisconsin court on the basis that the Wisconsin judgment was void
    for lack of person jurisdiction.
    The Full Faith and Credit Clause of the United States Constitution mandates
    that “[f]ull faith and credit shall be given in each state to the public acts,
    records, and judicial proceedings of every other state.” U.S. Const. Art. IV, §
    1. Full faith and credit means that “the judgment of a state court should have
    the same credit, validity, and effect, in every other court of the United States,
    which it had in the state where it was pronounced.” Gardner v. Pierce, 
    838 N.E.2d 546
    , 550 (Ind. Ct. App. 2005). Indiana has codified this notion at
    1
    Initially, we note that it is unclear from the record whether HKM is appealing the trial court‟s
    amended order granting Schumaker‟s motion to dismiss or the denial of its motion to correct error. However,
    regardless of from which order HKM now appeals, we conclude that the Wisconsin court had personal
    jurisdiction over Schumaker.
    3
    Indiana Code section 34–39–4–3, which provides that records and judicial
    proceedings from courts in other states “shall have full faith and credit given to
    them in any court in Indiana as by law or usage they have in the courts in
    which they originated.” Full faith and credit commands deference to the
    judgments of foreign courts, and “the judgment of a sister state, regular and
    complete upon its face, is prima facie valid.” 
    Id.
    A judgment of a foreign court is, however, open to collateral attack for
    want of personal jurisdiction or subject matter jurisdiction. Commercial Coin
    Laundry Sys. v. Enneking, 
    766 N.E.2d 433
    , 439 (Ind. Ct. App. 2002). Thus,
    before an Indiana court is bound by a foreign judgment, it may inquire into the
    jurisdictional basis for that judgment; if the first court did not have jurisdiction
    over the subject matter or relevant parties, full faith and credit need not be
    given. Lucas v. Estate of Stavos, 
    609 N.E.2d 1114
    , 1120 (Ind. Ct. App. 1993),
    trans. denied. A foreign judgment which is regular and complete on its face is
    presumed valid. 
    Id.
     A party attacking the judgment of a sister state has the
    burden of rebutting this presumption of validity and of showing that the sister
    state lacked jurisdiction. Commercial Coin Laundry Sys., 
    766 N.E.2d at 439
    .
    In assessing a collateral attack on a foreign judgment, we apply the law of the
    state where the judgment was rendered. 
    Id.
     A judgment which is void in the
    state where it was rendered is also void in Indiana. 
    Id.
    GIW Indus., Inc. v. Patriot Materials, Inc., 
    926 N.E.2d 491
    , 494-95 (Ind. Ct. App. 2010).
    Therefore, in order to prevail, Schumaker was required to establish that the Wisconsin court
    lacked jurisdiction in rendering its verdict under Wisconsin law.
    A. The Wisconsin Long-Arm Statute
    Turning to Wisconsin law, Wisconsin‟s long-arm statute, enacted in Wisconsin Statute
    section 801.05, provides, in pertinent part, as follows:
    A court of this state having jurisdiction of the subject matter has jurisdiction
    over a person served in an action pursuant to [section] 801.11 under any of the
    following circumstances:
    ****
    (5) Local services, goods or contracts. In any action which:
    ****
    (e) Relates to goods, documents of title, or other things of value actually
    received by the plaintiff in this state from the defendant without regard to
    where delivery to carrier occurred.
    4
    (emphasis added).
    The Wisconsin Court of Appeals has held that the court must make two inquiries in
    interpreting Wisconsin Statute section 801.05(5)(e) to determine whether personal
    jurisdiction exists over a nonresident defendant. Capitol Fixture and Woodworking Grp. v.
    Woodma Distribs., Inc., 
    432 N.W.2d 647
    , 649 (Wis. Ct. App. 1988). “First, whether [the
    nonresident defendant‟s] contacts with [the Wisconsin plaintiff] were sufficient to subject it
    to jurisdiction in Wisconsin under the state‟s „long-arm‟ statute, [section] 801.05(5)(e) [and
    s]econd, if so, would such application of this statute to [the nonresident defendant] violate
    due process requirements.” 
    Id.
    In determining that Wisconsin courts had personal jurisdiction over Woodma, the
    Wisconsin Court of Appeals stated as follows:
    Section 801.05 codifies the minimum contacts jurisdictional test to ensure that
    a nonresident‟s due process rights are not violated, as required by International
    Shoe Co. v. Washington, 
    326 U.S. 310
    , 316-17, 
    66 S.Ct. 154
    , 158-59, 
    90 L.Ed. 95
     (1945). The due process clause of the fourteenth amendment requires a
    nonresident defendant to have certain minimum contacts with a forum state
    before being sued in the forum. 
    Id. at 316-17
    , 
    66 S.Ct. at 158-59
    . Therefore,
    compliance with the statute and its subsections creates a rebuttable
    presumption that due process has been satisfied and that a court may confer
    personal jurisdiction over the nonresident party. Zerbel v. H.L. Federman &
    Co., 
    48 Wis.2d 54
    , 70, 
    179 N.W.2d 872
    , 881 (1970), appeal dismissed, 
    402 U.S. 902
    , 
    91 S.Ct. 1379
    , 
    28 L.Ed.2d 643
     (1971).
    The applicable subsection in this case, [section] 801.05(5)(e), requires
    that the resident plaintiff receive goods of value from the nonresident
    defendant before personal jurisdiction is acquired. Thus, in this instance, we
    must determine whether the sale, delivery, and installation of the groover
    constitutes the receipt of valued goods by [the Wisconsin plaintiff], pursuant to
    sec. 801.05(5)(e), and whether there were sufficient contacts to subject [the
    nonresident defendant] to Wisconsin jurisdiction under the long-arm statute.
    5
    We answer this affirmatively and support this conclusion by citing persuasive
    comments prepared by the statute‟s reporter.
    The reporter, Professor Foster, writes that sufficient minimum contacts
    exist under [section] 801.05(5) if the following three jurisdictional facts are
    present:
    (i) a claim arising out of a bargaining arrangement made with
    the defendant by or on behalf of the plaintiff;
    (ii) a promise or other act of the defendant, made or performed
    anywhere, which evidences the bargaining arrangement sued
    upon; and
    (iii) a showing that the arrangement itself involves or
    contemplates some substantial connection with the state.
    Revision Notes, subsec[tion] (5), Wis. Stat. Ann. sec. 801.05 (West 1977).
    Id. at 649-50.
    As was determined in Woodma Distributors, here we conclude that the above three
    factors have been met.2 First, there was an initial contact between HKM and Schumaker
    which resulted in HKM traveling to the Boat Show where the parties entered into a contract
    for the sale of a Boat. Second, the Boat was delivered to HKM in Wisconsin by Schumaker.
    Third, Schumaker accepted final payment for the Boat in Wisconsin and representatives from
    Schumaker traveled to Wisconsin to retrieve the Boat and bring it back to Indiana for repairs
    before redelivering the repaired Boat to HKM in Wisconsin. Again, as was determined by
    the Wisconsin Court of Appeals in Woodma Distributors, we conclude that “[t]he presence of
    these three factors contemplated by [section] 801.05(5)(e) raises a presumption of
    compliance with the minimum due process standards required by International Shoe” and are
    2
    In Woodma Distributors, the Wisconsin Court of Appeals determined that the three factors had been
    met because there was a contract between Capitol Fixture and a New York defendant for the sale of machinery,
    the machinery was delivered to Wisconsin pursuant to the parties‟ contract, and the New York defendant sent a
    technician to Wisconsin to install the machine pursuant to the contract terms. Woodma Distribs., 
    432 N.W.2d at 650
    .
    6
    sufficient to establish jurisdiction under section 801.05(5)(e) of the Wisconsin long-arm
    statute.3 See 
    id. at 650
    .
    B. Constitutional Considerations
    Again, Wisconsin courts presume that compliance with the Wisconsin long-arm
    statute satisfies the requirements of due process, although the presumption may be rebutted.
    Wayne Pigment Corp. v. Halox, 
    220 F.Supp.2d 931
    , 935 (E.D. Wis. 2002) (citing Johnson
    Worldwide Assoc., Inc. v. Brunton Co., 
    12 F.Supp.2d 901
    , 910 (E.D. Wis. 1998)).
    Due process permits a Wisconsin court to exercise jurisdiction over a
    defendant who has “minimum contacts” with this state such that maintenance
    of a lawsuit here “does not offend „traditional notions of fair play and
    substantial justice.‟” Int’l Shoe Co. v. Washington, 
    326 U.S. 310
    , 316, 
    66 S.Ct. 154
    , 
    90 L.Ed. 95
     (1945) (quoting Milliken v. Meyer, 
    311 U.S. 457
    , 463, 
    61 S.Ct. 339
    , 
    85 L.Ed. 278
     (1940)). The defendant must have “purposefully
    established minimum contacts within the forum State” before personal
    jurisdiction will be found to be reasonable and fair. Burger King Corp. v.
    Rudzewicz, 
    471 U.S. 462
    , 476, 
    105 S.Ct. 2174
    , 
    85 L.Ed.2d 528
     (1985).
    Crucial to the minimum contact analysis is a showing that the defendant
    “should reasonably anticipate being haled into court [in the forum State],” 
    id. at 474
    , 
    105 S.Ct. 2174
     (quoting World-Wide Volkswagen Corp. v. Woodson,
    
    444 U.S. 286
    , 297, 
    100 S.Ct. 559
    , 
    62 L.Ed.2d 490
     (1980)), because the
    defendant has “purposefully avail[ed] itself of the privilege of conducting
    activities” there. Burger King, 
    471 U.S. at 475
    , 
    105 S.Ct. 2174
     (quoting
    Hanson v. Denckla, 
    357 U.S. 235
    , 253, 
    78 S.Ct. 1228
    , 
    2 L.Ed.2d 1283
     (1958)).
    When the basis for personal jurisdiction is specific jurisdiction, the suit
    must “arise out of” or “be related to” these minimum contacts with the forum
    state. This nexus is important because it aims to give “a degree of
    predictability to the legal system that allows potential defendants to structure
    their primary conduct with some minimum assurance as to where that conduct
    will and will not render them liable to suit.” World-Wide Volkswagen, 
    444 U.S. at 297
    , 
    100 S.Ct. 559
    .
    3
    Having concluded that the Wisconsin court had specific personal jurisdiction over Schumaker in the
    underlying matter pursuant to section 801.05(5)(e) of the Wisconsin long-arm statute, we need not consider
    HKM‟s argument relating to whether Wisconsin courts also had personal jurisdiction over Schumaker under
    section 801.05(4) of the Wisconsin long-arm statute.
    7
    Id. at 935-36.
    Thus, in order to determine whether Schumaker has overcome the presumption that
    the Wisconsin long-arm statute satisfies due process requirements, we must examine the
    quality and nature of Schumaker‟s contacts with Wisconson. See Woodma Distribs., 
    432 N.W.2d at 650
    . Specifically, we must determine whether, in the underlying matter,
    conferring personal jurisdiction over Schumaker in Wisconsin offends the “traditional
    notions of fair play and substantial justice” as outlined in International Shoe. See 
    id.
     The
    Wisconsin Supreme Court has outlined a five-factor test that determines whether a
    nonresident‟s due process has been violated. 
    Id.
     “The factors are: (1) quantity of contacts;
    (2) nature and quality of contacts; (3) source of cause of action; (4) interest in Wisconsin in
    the action; and (5) convenience; however, all need not be present in substantial degree before
    jurisdiction exists.” 
    Id.
     (citation omitted).
    Treating the quantity, nature, and quality of Schumaker‟s contacts together, we
    conclude that although the quantity of contact was limited to initial correspondence with
    HKM in Wisconsin that resulted in HKM visiting the Boat Show where the parties entered
    into the purchase agreement, delivery of the Boat, acceptance of final payment in Wisconsin,
    retrieval of Boat for repairs, and redelivery of Boat, the nature and quality of these contacts
    were substantial and constitute more than minimal contact with Wisconsin. See 
    id.
    (providing that treating the quantity, nature, and quality of Woodma‟s contacts together, the
    sale, delivery, and installation of the groover constituted more than minimal contact with
    Wisconsin); see also Wisconsin Elec. Mfg. Co. v. Pennant Prod., Ind., 
    619 F.2d 676
     (7th Cir.
    8
    1980) (finding that personal jurisdiction did not offend the New York corporation‟s due
    process rights because it had availed itself of the privileges of conducting activities within
    Wisconsin through its contacts and thereby invoked the benefits and protections of its laws).
    We also conclude that Schumaker contemplated more than an isolated contact with
    Wisconsin when it agreed to deliver, retrieve, and redeliver the Boat to Wisconsin and are
    unconvinced by Schumaker‟s argument that allowing the Wisconsin courts to assert personal
    jurisdiction over him in the instant matter would violate his due process rights because it only
    delivered, retrieved, and redelivered the Boat to and from Wisconsin at HKM‟s insistence.
    See Woodma Distribs., 
    432 N.W.2d at 650
     (finding that Woodma contemplated more than
    isolated contact with Wisconsin when it agreed to install the groover as a condition for
    payment). Regardless of why Schumaker decided to travel to Wisconsin to deliver, retrieve,
    and then redeliver the Boat, we believe that these contacts were substantial and constitute
    more than minimal contact with Wisconsin.
    Additionally, the source of the underlying action arises out of Schumaker‟s contacts
    with Wisconsin and Wisconsin‟s interest in the instant matter is to provide a forum for the
    protection of a Wisconsin resident party‟s interest, such as HKM, when they are allegedly
    injured. See 
    id.
    Finally, with respect to the issue of convenience, we must consider whether it is
    reasonable to subject Schumaker to jurisdiction in Wisconsin in the underlying matter. See
    
    id.
     Upon review of the facts relating to the underlying matter, we conclude that it is
    reasonable to subject Schumaker to personal jurisdiction in Wisconsin without offending
    9
    Schumaker‟s right to fairness and justice. As an Indiana seller, Schumaker cannot be
    surprised that it could possibly expose itself to litigation relating to the sale of its product in a
    buyer‟s state.    See 
    id. at 651
    .       In addition, Schumaker arranged for its counsel to
    communicate with the Wisconsin court, and through its counsel, could likely have arranged
    for effective local counsel without unreasonably inconveniencing itself.                    See 
    id.
    Furthermore, had Schumaker appeared at trial for the underlying action, the action could
    have potentially required expert testimony which could have stemmed from states other than
    Wisconsin or Indiana.         See 
    id.
        Accordingly, we conclude that the balancing of
    inconveniences in this instance falls in favor of HKM and conferring personal jurisdiction
    over Schumaker in the Wisconsin courts.
    Having concluded that in the underlying matter, Schumaker was subject to personal
    jurisdiction in the Wisconsin courts under section 801.05(5)(e) of the Wisconsin long-arm
    statute because its contacts meet the statutory requirements of Wisconsin Code section
    801.05(5)(g) and the exercise of jurisdiction does not offend the traditional notions of
    fairness and justice required by International Shoe, we reverse the judgment of the trial court
    and remand for further proceedings consistent with this opinion.
    The judgment of the trial court is reversed and remanded for further proceedings
    consistent with this opinion.
    KIRSCH, J., and BARNES, J., concur.
    10