Glumina Bank v. D.C. Diamond Corporation ( 2000 )

Present: Carrico, C.J., Compton, ∗ Lacy, Hassell, Keenan, Koontz,
and Kinser, JJ.
GLUMINA BANK d.d.
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 991042 March 3, 2000
Dall. C. DIAMOND CORPORATION, ET AL.
FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY
Frank A. Hoss, Jr., Judge
In this appeal of a default judgment in a contract action
against a nonresident defendant, we must determine whether the
trial court properly entered the judgment.
On October 7, 1998, appellees D. C. Diamond Corporation and
Karlo Milic filed in the clerk's office of the court below a
motion for judgment against appellant Glumina Bank d.d., for
breach of contract. The plaintiffs sought recovery of $460,000
plus attorney's fees and interest.
The plaintiffs alleged that Diamond is a Virginia
corporation engaged in the business of real estate development
and that Milic is an alien resident of the Commonwealth but a
citizen of Croatia. The plaintiff further alleged that
defendant is a bank located in Zagreb, Croatia.
The plaintiffs also alleged that on two occasions in June
1998, acting through Milic, they contracted with defendant "to
∗
Justice Compton participated in the hearing and decision of
this case prior to the effective date of his retirement on
transfer, deliver, and supply" to the corporation's bank account
in Manassas a total of $460,000 from cash funds delivered in
American dollars to defendant from the sale of real estate. The
plaintiffs further alleged that defendant "failed to transfer,
deliver, and supply the funds as promised."
The plaintiffs also alleged that on "several occasions
prior to" June 1998, "pursuant to contracts" between the
plaintiffs and defendant, the defendant "had transferred,
delivered, and supplied" to the corporation's Manassas bank
account funds received in Croatia from Milic.
Additionally, plaintiffs alleged that when the contracts
were entered into on June 19 and 29, 1998, Milic and defendant
"clearly and definitely intended" that the corporation be "a
direct beneficiary of those contracts," and that the corporation
"was and is both a direct beneficiary and a third party
beneficiary of those contracts."
Also, plaintiffs alleged that they had made demand upon
defendant "to honor its contractual obligations to supply the
funds" to the corporation in Virginia but defendant "has failed
to do so and has refused to refund the funds to Milic."
Finally, plaintiffs alleged that the trial court could
exercise personal jurisdiction over defendant pursuant to Code
§ 8.01-328.1(A)(2) ("court may exercise personal jurisdiction
February 2, 2000.
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over a person, who acts directly or by an agent, as to a cause
of action arising from the person's . . . [c]ontracting to
supply services or things in this Commonwealth . . . .").
The plaintiffs filed with the motion for judgment an
affidavit for service of process on the Secretary of the
Commonwealth as statutory agent for the nonresident defendant,
as authorized by Code § 8.01-329(B). As required, the affidavit
set forth the last known address of the defendant in Croatia.
In a Certificate of Compliance, the Secretary of the
Commonwealth reported to the trial court that service of the
notice of motion for judgment was made on her on October 13,
1998, and that the suit papers were forwarded by registered mail
to defendant at the Croatian address on November 2, 1998.
Service was effective on November 10, 1998, when the Certificate
of Compliance was filed in the circuit court. Code § 8.01-
329(C).
The defendant failed to file a pleading in response within
21 days after service of process; therefore, it was in default.
Rule 3:5; Rule 3:17.
On December 14, 1998, a paper labeled "Pleading on Motion
for Judgement" was lodged with the clerk of the trial court. It
was signed "Glumina Bank by Attorney . . . Mladen Simundic,"
giving a Croatian address. Defendant's counsel of record on
appeal correctly admits that this "responsive pleading" was not
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filed by an attorney authorized to practice law in Virginia and,
as such, is a "nullity and should be stricken."
On December 22, 1998, another Certificate of Compliance was
filed in the trial court by the Secretary of the Commonwealth
dated five days earlier. That document included another
affidavit executed by plaintiffs' attorney to support service of
process of a "Praecipe" upon the nonresident defendant. The
Certificate reported: "On Dec 17 1998, papers described in the
Affidavit were forwarded by Fed Ex mail, return receipt
requested, to the party designated to be served with process in
the Affidavit." The praecipe served on defendant through the
Secretary of the Commonwealth was a notice and motion filed in
the clerk's office below on December 7, 1998, returnable
December 18, 1998, for entry of a default judgment.
The hearing on the motion for default judgment was
continued to February 19, 1999. On that day, counsel for the
plaintiffs appeared in support of the motion. There was no
appearance by or on behalf of the defendant. After a brief
hearing, at which only an interpreter testified, the court
entered a default judgment against the defendant in the amount
of $460,000 plus interest and attorney's fees.
Three days later, on February 22, 1999, defendant, through
a Virginia attorney, filed a "Special Appearance, Motion to
Quash Service and Objection to Jurisdiction," as well as a
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"Notice and Motion to Set Aside Default Judgment." Following a
March 5, 1999 hearing on the several motions, at which counsel
for the plaintiffs and counsel for the defendant appeared, the
court denied the motions.
The defendant appeals and contends the trial court erred in
entering the default judgment. It argues that the trial court
lacked personal jurisdiction over defendant, and that the
service of process of the notice of motion for judgment and the
praecipe through the Secretary of the Commonwealth was improper
because none of the bases for personal jurisdiction under Code
§ 8.01-328.1 "have been alleged or proven." These contentions
are meritless.
Of course, any money judgment rendered without personal
jurisdiction over the defendant is void. Finkel Outdoor Prods.,
Inc. v. Bell, 205 Va. 927, 931, 140 S.E.2d 695, 698 (1965). But
as we already have said, Code § 8.01-328.1(A)(2), a part of
Virginia's long-arm statute dealing with the exercise of in
personam jurisdiction over nonresidents, permits courts of the
Commonwealth to "exercise personal jurisdiction over a person,
who acts directly or by an agent, as to a cause of action
arising from the person's . . . [c]ontracting to supply services
or things in this Commonwealth."
A "person," as used in the foregoing statute, includes a
"commercial entity, whether or not a citizen or domiciliary of
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this Commonwealth and whether or not organized under the laws of
this Commonwealth." Code § 8.01-328. Thus, nonresident
defendant Glumina Bank qualifies as a "person" under the
statute.
"The function of our long-arm statute is to assert
jurisdiction over nonresidents who engage in some purposeful
activity in Virginia, to the extent permissible under the Due
Process Clause of the Constitution of the United States." Nan
Ya Plastics Corp. U.S.A. v. DeSantis, 237 Va. 255, 259, 377
S.E.2d 388, 391, cert. denied, 492 U.S. 921 (1989). Accord
Peninsula Cruise, Inc. v. New River Yacht Sales, Inc., 257 Va.
315, 319, 512 S.E.2d 560, 562 (1999). The Due Process Clause,
however, protects a person's liberty interest in not being
subject to the binding judgment of a forum unless the person has
"certain minimum contacts" within the territory of the forum so
that maintenance of the action does not offend "traditional
notions of fair play and substantial justice." DeSantis, 237
Va. at 259, 377 S.E.2d at 391 (quoting International Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)). Accord Peninsula Cruise,
257 Va. at 319, 512 S.E.2d at 562.
To determine whether this nonresident defendant engaged in
some purposeful activity in Virginia and whether it had
sufficient minimum contacts within the Commonwealth, we must
examine the facts. In this case, because the defendant was in
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default under our rules of procedure, the trial court properly
could find the factual allegations of the motion for judgment
accurate, as those allegations related to personal jurisdiction.
See Landcraft Co. v. Kincaid, 220 Va. 865, 874, 263 S.E.2d 419,
425 (1980).
Those jurisdictional facts establish that defendant,
pursuant to contracts between the plaintiffs and defendant
entered into before June 19, 1998, had transferred to the
Diamond Corporation's Manassas bank account funds received in
Croatia from Milic. In accord with this prior course of
dealing, the defendant entered into two more contracts in June
1998 in which it promised again to transfer to the corporation's
Manassas bank account a total of $460,000 delivered in cash by
Milic to defendant. According to the facts, the defendant
breached both of the June contracts by failing to honor its
obligations to supply the funds to the corporation's Virginia
account or to refund the money to Milic.
Consequently, the plaintiffs' cause of action for breach of
contract clearly arises from the defendant's "[c]ontracting to
supply services or things in this Commonwealth," in the language
of the long-arm statute. Manifestly, the nonresident defendant
has engaged in purposeful activity in Virginia, and there are
sufficient minimum contacts within Virginia so that maintenance
of this action here does not offend traditional notions of fair
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play and substantial justice. See Elefteriou v. Tanker
Archontissa, 443 F.2d 185, 188 (4th Cir. 1971) (failure to make
payment to seaman under contract made outside United States by
ship owner for payment within Virginia provides basis for
assertion of personal jurisdiction for owner's supplying
services or things in Virginia within meaning of long-arm
statute). Compare Promotions, Ltd. v. Brooklyn Bridge
Centennial Comm'n, 763 F.2d 173, 175 (4th Cir. 1985) (seeking to
enforce its right to sell the Brooklyn Bridge, entrepreneur
plaintiff, a Virginia corporation, failed to establish personal
jurisdiction over New York defendants in Virginia under portion
of long-arm statute at issue here because "any contract between
plaintiff and defendants was made and was to be carried out in
New York. The long arm of § 8.01 does not extend to a contract
formed and performed outside Virginia").
The defendant's second contention that service of the
notice of motion for judgment and the praecipe through the
Secretary of the Commonwealth was improper because none of the
bases for personal jurisdiction under Code § 8.01-328.1 "have
been alleged or proven" is but a rehash of its first contention.
Code § 8.01-329 plainly provides for service of process to be
made upon the Secretary of the Commonwealth as statutory agent
of a person against whom "the exercise of personal jurisdiction
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is authorized" under Code § 8.01-328.1. This nonresident
defendant is such a person, as we have just demonstrated.
In sum, there was full compliance by the plaintiffs with
each procedural requirement leading to the judgment by default.
See Landcraft Co., 220 Va. at 872-73, 263 S.E.2d at 424.
Accordingly, we hold that the trial court properly entered the
default judgment, and it will be
Affirmed.
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