Timothy C. Troxel v. Dale Ward, successor in interest to original Plan Administrators, Inc.

FILED
Sep 17 2018, 9:02 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Kevin E. Steele James R. Schrier
Burke Costanza & Carberry LLP Reiling Teder & Schrier, LLC
Valparaiso, Indiana Lafayette, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Timothy C. Troxel, September 17, 2018
Appellant-Defendant, Court of Appeals Case No.
18A-PL-597
v. Appeal from the LaPorte Circuit
Court
Dale Ward, successor in interest The Honorable Thomas J.
to original Plaintiff, Alevizos, Judge
Plan Administrators, Inc., Trial Court Cause No.
Appellee-Plaintiff 46C01-1605-PL-796
Vaidik, Chief Judge.
Case Summary
[1] A Wisconsin corporation obtained a default judgment against Timothy C.
Troxel in Wisconsin state court and later sought to enforce that judgment in
Indiana. The LaPorte Circuit Court ultimately ordered the sale of Troxel’s
stock in an Indiana corporation to satisfy the Wisconsin judgment. Upon
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learning of the sale of his stock, Troxel filed a motion to set aside the sale
pursuant to Indiana Trial Rule 60(B). Because Troxel was not properly served
with notice of the Wisconsin lawsuit, the Wisconsin court did not have
personal jurisdiction over him. Accordingly, the Wisconsin judgment and any
Indiana orders based upon it are void. We therefore reverse the trial court’s
denial of Troxel’s Trial Rule 60(B) motion.
Facts and Procedural History
[2] In late 2013 or early 2014, Troxel moved from Indiana to Florida. See
Appellant’s App. Vol. II pp. 77 (Troxel’s affidavit stating that he has been a
Florida resident since December 2013), 11 (trial court’s order stating that Troxel
became a Florida resident in 2014); Tr. p. 19 (Troxel testifying that in late 2013,
he bought a condo in Florida and “intended to stay there”). In November
2014, Plan Administrators, Inc., a Wisconsin corporation with its principal
place of business in Wisconsin, filed a lawsuit against Troxel and WK Payroll,
Inc. (Troxel’s company) in Wisconsin state court. The complaint alleged that
in 2013 WK Payroll executed a promissory note agreeing to pay Plan
Administrators $653,000, Troxel executed a guaranty for the $653,000
promissory note, WK Payroll breached the promissory note by failing to make
payments, and Plan Administrators was accelerating the amount due. The
complaint also alleged:
Timothy Troxel is an adult resident of the state of Indiana. His
address is unknown but he utilizes P.O. Box 637, Franc[e]sville,
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Indiana 47946 as his mail box for delivery of mail, notices and
the like.
Appellant’s App. Vol. II p. 83.1 On December 29, 2014, Plan Administrators
left a copy of the summons and complaint for Troxel and WK Payroll at 106 E.
Montgomery Street in Francesville, Indiana. According to Troxel, he owned a
company called ASI Property Management and that company owned the brick
building at 106 E. Montgomery Street from “2003 until roughly 2015,” when it
was foreclosed. Tr. p. 14.
[3] When neither WK Payroll nor Troxel responded to the Wisconsin lawsuit, Plan
Administrators filed a motion for default judgment in April 2015 alleging that
the complaint and summons “were properly served on [WK Payroll and
Troxel] on December 29, 2014” and they have “failed to answer or otherwise
respond.” Appellant’s App. Vol. II p. 153.2 In support, Plan Administrators
filed, among other things, an Affidavit of Service explaining how service was
attempted on Troxel in Indiana. The Affidavit of Service, executed by the
1
Notably, the guaranty that Plan Administrators attached to the complaint states that Troxel is a Florida
resident. See Appellant’s App. Vol. II p. 90.
2
Plan Administrators’ attorney submitted an Affidavit of Default along with the motion for default
judgment. The Affidavit of Default erroneously provides that the summons and complaint were “personally
served” on WK Payroll and Troxel on December 29, 2014. Appellant’s App. Vol. II p. 160.
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process server, provides:
Id. at 159.3 A second affidavit from the process server similarly provides:
4 attempts made [at 106 E. Montgomery Street] with no evidence
of occupancy—neighbors, businesses & city offices were
canvassed and opinion of those persons is that defendant moved
when his business closed. Business is now vacant.
Id. at 161.
[4] Before the Wisconsin court entered default judgment, the clerk asked Plan
Administrators’ attorney for the “citation for the Indiana Stat. that permits
posting a summons & Complaint as a substitute for personal service.” Id. at
143. This is because the Wisconsin service rules provide that if a defendant is
not personally served “within or without” Wisconsin, the defendant may be
served in another state according to that state’s service rules. See Wis. Stat. §
801.11(1)(b)(2); Judicial Council Notes, 1986, Wis. Stat. § 801.11. Plan
3
The Affidavit of Service for WK Payroll is identically worded. See Appellant’s App. Vol. II p. 158.
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Administrators gave the Wisconsin court a copy of Indiana Trial Rule 4.1,
which provides that service may be made on an individual by “leaving a copy of
the summons and complaint at his dwelling house or usual place of abode.”
Ind. Trial Rule 4.1(A)(3). Plan Administrators argued that it satisfied Indiana
Trial Rule 4.1(A)(3) because its process server “left a copy of the Summons and
Complaint at the dwelling.” Appellant’s App. Vol. II p. 150.
[5] On April 16, 2015, the Wisconsin court entered default judgment in favor of
Plan Administrators and against WK Payroll and Troxel in the amount of
$490,010.13 plus costs. Id. at 16.
[6] Over a year later, in May 2016, Plan Administrators filed in LaPorte Circuit
Court a Notice of Filing of Foreign Judgment and a Complaint to Enforce
Foreign Judgment against Troxel pursuant to Indiana Code chapter 34-54-11,
Indiana’s Uniform Enforcement of Foreign Judgments Act (UEFJA). Pursuant
to the UEFJA, Plan Administrators also filed an affidavit setting forth that
Troxel was an Indiana resident “living in LaPorte County, with a last-known
address of 412 South Washington Street, La Crosse, Indiana 46348.” Id. at 21;
see also Ind. Code § 34-54-11-2(a). A summons and complaint were sent via
certified mail to Troxel at the La Crosse, Indiana address; however, they were
marked “return[ed] to sender” and “unable to forward.” Appellant’s App. Vol.
II p. 24; see also I.C. § 34-54-11-2(d) (providing that the judgment creditor shall
“(1) mail a notice of the filing of the [foreign] judgment to the judgment debtor;
and (2) file proof of mailing with the clerk.”).
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[7] Nevertheless, Plan Administrators moved forward. The next month, June
2016, Plan Administrators filed a motion for proceedings supplemental against
Troxel and Adaptasoft, Inc., as garnishee defendant (based on Troxel’s
ownership of stock in Adaptasoft). A hearing was scheduled for July 18.
Notice of the hearing was published in the Herald Argus, a daily newspaper in
LaPorte, on June 22, June 29, and July 6. Appellant’s App. Vol. II pp. 29-32.
Troxel did not appear at the hearing.
[8] In February 2017, Plan Administrators filed a notice that it had assigned its
right, title, and interest in the Wisconsin judgment to Dale Ward, and Ward
was substituted as a party in this case. Id. at 34. Ward then asked the LaPorte
Circuit Court for an order authorizing the sale of 8578 shares of Adaptasoft
stock (which was valued at approximately $300,000) owned by Troxel. Id. at
36, 42. In May, the LaPorte Circuit Court entered an order authorizing the sale
of Troxel’s stock, which was to take place on June 29 at the courthouse in
LaPorte. Id. at 44, 48. Notice of the sale was published in The News Dispatch,
a daily newspaper in Michigan City, on June 1 and 8. Id. at 54. Ward
purchased Troxel’s stock at the sale. Id. at 50.
[9] After learning of the sale of his Adaptasoft stock, Troxel filed a motion to set
aside the sale pursuant to Indiana Trial Rule 60(B) in August 2017. Id. at 55.
Following a hearing, the LaPorte Circuit Court issued an order denying the
motion to set aside. Id. at 11.
[10] Troxel now appeals.
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Discussion and Decision
[11] Troxel contends, among other things, that the LaPorte Circuit Court’s order
authorizing the sale of his Adaptasoft stock is void pursuant to Trial Rule
60(B)(6) because he “was not properly served with either the institution of the
underlying [Indiana] action or the attempt to sell his Adaptasoft stock.”
Appellant’s Reply Br. p. 8. Indiana Trial Rule 60(B)(6) provides that a court
may relieve a party from a judgment, including a default judgment, because the
judgment is void. Rather than addressing whether Troxel was properly notified
of the Indiana proceedings, we find that the LaPorte Circuit Court’s order
authorizing the sale of Troxel’s stock is void for purposes of Trial Rule 60(B)(6)
for a more fundamental reason. That is, “[a] judgment which is void in the
state where it is entered is also void in Indiana” and cannot be the basis for a
subsequent judgment in Indiana. Jenkins v. Futch, 640 N.E.2d 379, 381 (Ind. Ct.
App. 1994) (concluding that because a Texas order was void for lack of
personal jurisdiction, the Indiana trial court “erred in enforcing this void
order”); P.M.S., Inc. v. Jakubowski, 585 N.E.2d 1380, 1382-83 (Ind. Ct. App.
1992) (concluding that because a New York default judgment was void for lack
of personal jurisdiction, the Indiana trial court’s order enforcing it was also
void); see also GIW Indus., Inc., v. Patriot Materials, Inc., 926 N.E.2d 491, 495
(Ind. Ct. App. 2010); Commercial Coin Laundry Sys. v. Enneking, 766 N.E.2d 433,
439 (Ind. Ct. App. 2002).
[12] The United States Constitution requires state courts to give full faith and credit
to the judgments of the courts of all states. U.S. Const. art. IV, § 1. However,
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an out-of-state judgment is always open to collateral attack for lack of personal
or subject-matter jurisdiction. GIW Indus., 926 N.E.2d at 494. 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 parties or the subject matter, then full faith and credit need not be
given. Id. The party attacking the judgment of a sister state bears the burden of
rebutting the presumption that a foreign judgment, which is regular and
complete on its face, is valid. Id. In assessing a collateral attack on a foreign
judgment, we apply the law of the state where the judgment was rendered. Id.
[13] We recognize that Troxel does not argue that the Wisconsin judgment is void
for lack of personal jurisdiction in the context of Trial Rule 60(B)(6); however,
he does challenge the Wisconsin judgment in his brief. See Appellant’s Br. pp.
21-22. And on appeal, Ward recognizes that Troxel has challenged the
Wisconsin judgment. See Appellee’s Br. p. 23 (“Troxel appears to suggest that
the Wisconsin judgment is void because that court lacked personal
jurisdiction . . . .”); see also Tr. p. 23 (trial court acknowledging at the hearing
that Troxel had attacked the validity of the Wisconsin judgment “back
handedly”). Ward argues, however, that the scope of jurisdictional review is
limited. See V.L. v. E.L., 136 S. Ct. 1017, 1020 (2016) (explaining that
jurisdictional inquiry into a foreign court’s judgment is limited: “[I]f the
judgment on its face appears to be a record of a court of general jurisdiction,
such jurisdiction over the cause and the parties is to be presumed unless
disproved by extrinsic evidence, or by the record itself.” (quotations omitted)).
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Ward claims that personal jurisdiction should be presumed in this case because
“[t]here is nothing in the record itself or in the evidence submitted to suggest
that jurisdiction was not proper in the Wisconsin lawsuit.” Appellee’s Br. p. 23.
[14] But there is such evidence. In accordance with the Wisconsin service rules,
Plan Administrators attempted to serve Troxel pursuant to Indiana Trial Rule
4.1(A)(3), which provides that service may be made on an individual by
“leaving a copy of the summons and complaint at his dwelling house or usual
place of abode.” (Emphasis added). Plan Administrators argued that leaving a
copy of the summons and complaint at 106 E. Montgomery Street in
Francesville, Indiana, satisfied Indiana Trial Rule 4.1(A)(3) because the
documents were left “at the dwelling.” Appellant’s App. Vol. II p. 150.
[15] However, service upon a defendant’s former residence is not sufficient to confer
personal jurisdiction. Mills v. Coil, 647 N.E.2d 679, 681 (Ind. Ct. App. 1995),
reh’g denied, trans. denied; see also Poteet v. Bethke, 507 N.E.2d 652, 654 (Ind. Ct.
App. 1987) (concluding that service was defective because the complaint and
summons were left at an address that the defendant had permanently moved
from ten months earlier). Here, the Affidavit of Service, submitted by Plan
Administrators, establishes that 106 E. Montgomery Street was not Troxel’s
dwelling house or usual place of abode when the process server left the
summons and complaint there on December 29, 2014. The Affidavit of Service
provides that on four separate occasions the process server went to the property
but there was “no response.” Appellant’s App. Vol. II p. 159. Moreover, the
process server stated that the property was “vacant” with “no one . . . living
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there now.” Id.; see also id. at 161 (“4 attempts made with no evidence of
occupancy . . . .”). The process server also spoke with several people in the
area, and it was believed that Troxel had moved from the vacant address two to
three weeks earlier. Even if we assume that Troxel had previously lived at 106
E. Montgomery Street, it was not his dwelling house or usual place of abode
when service was attempted there on December 29, 2014. Accordingly, Troxel
was not properly served with notice of the Wisconsin lawsuit pursuant to
Indiana Trial Rule 4.1(A)(3).
[16] According to Wisconsin law, a court gains personal jurisdiction over a party
only by valid personal or substituted service. PHH Mortg. Corp. v. Mattfeld, 799
N.W.2d 455, 458 (Wis. Ct. App. 2011); see also Wis. Stat. § 801.04 (providing
that a court who has subject-matter jurisdiction may render a judgment against
a party personally only if a summons is served upon the person pursuant to
Section 801.11 or the person appears and waives the defense of lack of personal
jurisdiction). Wisconsin compels strict compliance with its service rules even
though the consequences may appear to be harsh. PHH Mortg., 799 N.W.2d at
458. Because Troxel was not properly served with notice of the Wisconsin
lawsuit, the Wisconsin court did not have personal jurisdiction over Troxel
when it entered default judgment against him and therefore that judgment is
void.4 Accordingly, any Indiana orders based on the void Wisconsin judgment
4
Ward nevertheless argues that the Wisconsin court had personal jurisdiction over Troxel because Plan
Administrators’ attorney informed Troxel’s attorney about the Wisconsin lawsuit in a telephone call. See
Appellee’s App. Vol. II p. 2. Even if Troxel knew about the Wisconsin lawsuit from his attorney, which he
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are also void. See, e.g., Jenkins, 640 N.E.2d at 381. We therefore reverse the
LaPorte Circuit Court’s denial of Troxel’s Trial Rule 60(B) motion and remand
with instructions for the court to vacate its order authorizing the sale of Troxel’s
stock.
[17] Reversed and remanded.
Riley, J., and Kirsch, J., concur.
denied at the hearing, see Tr. p. 18, it is the law in both Wisconsin and Indiana that the mere fact that a
defendant has knowledge of the action does not grant a court personal jurisdiction, Goodson v. Carlson, 888
N.E.2d 217, 220 (Ind. Ct. App. 2008); Hill v. Ramey, 744 N.E.2d 509, 512 (Ind. Ct. App. 2001); Span v. Span,
191 N.W.2d 209, 211 (Wis. 1971).
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