Harry Kaufmann Motorcars, Inc. v. Schumaker Performance, Inc.

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.
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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.
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(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.
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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.
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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.
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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.
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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
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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.
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