Indiana University Health Southern Indiana Physicians, Inc. v. Charlene Noel

FILED
Nov 07 2018, 8:59 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
James L. Whitlatch Sara A. Langer
Kathryn DeWeese Steven L. Langer
Bloomington, Indiana Valparaiso, Indiana
ATTORNEYS FOR AMICUS CURIAE ATTORNEY FOR AMICUS CURIAE
DEFENSE TRIAL COUNSEL OF INDIANA INDIANA TRIAL LAWYERS
Robert J. Palmer ASSOCIATION
Mishawaka, Indiana David L. Farnbauch
Fort Wayne, Indiana
Lucy R. Dollens
Indianapolis, Indiana Diana C. Bauer
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Indiana University Health November 7, 2018
Southern Indiana Physicians, Court of Appeals Case No.
Inc., Sarah Whiteman, NP, and 18A-CT-1299
Carlito D. Sabandal, M.D., Appeal from the
Appellants-Defendants, Marion Superior Court
The Honorable
Rafi Siddiqi, M.D., Indiana Michael D. Keele, Judge
University Health Bedford, Inc., Trial Court Cause No.
d/b/a Indiana University 49D07-1802-CT-7520
Health Bedford Hospital,
Defendants,
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v.
Charlene Noel,
Appellee-Plaintiff.
Altice, Judge.
Case Summary
[1] In February 2018, Charlene Noel filed a medical malpractice complaint in
Marion Superior Court against several defendants, including Indiana University
Health Southern Indiana Physicians, Inc. (IU Health SIP), Sarah Whiteman,
NP, and Carlito Sabandal, M.D. (collectively, Appellants). Appellants filed a
motion to transfer venue, alleging that Marion County was not a preferred
venue under Ind. Trial Rule 75 and requesting that the case be transferred to
Lawrence County. The trial court denied the motion. Appellants appeal from
the denial of their motion to transfer venue. Amicus curiae briefs have been
filed by Defense Trial Counsel of Indiana (DTCI) and Indiana Trial Lawyers
Association (ITLA), aligned with Appellants and Noel, respectively.
[2] The only connection that any of the defendants have to Marion County is the
Indianapolis address of the registered agent for IU Heath SIP and Indiana
University Health Bedford, Inc., d/b/a Indiana University Health Bedford
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Hospital (IU Bedford Hospital) (collectively, IU Health Entities). Based on this
connection, Noel contends that Marion County is a preferred venue under T.R.
75(A)(4) and our Supreme Court’s interpretation of this rule in American Family
Ins. Co. v. Ford Motor Co., 857 N.E.2d 971 (Ind. 2006) (American Family).
Appellants, however, direct us to Ind. Code § 23-0.5-4-12 that went into effect
January 1, 2018. This statute provides in part: “The address of the [registered]
agent does not determine venue in an action or a proceeding involving the
entity.” Noel responds that the statute is a nullity because it conflicts with T.R.
75(A)(4) as interpreted by the Court in American Family.
[3] We affirm.1
Facts & Procedural History
[4] On February 23, 2018, Noel filed her medical malpractice action in Marion
Superior Court against IU Bedford Hospital, Rafi Siddiqi, M.D., and
Appellants. The alleged malpractice took place at IU Bedford Hospital, which
is in Lawrence County. Noel is also a resident of Lawrence County. IU Health
Entities share the same registered agent, Mary Beth Claus, located at an address
in Marion County. Based on the location of the registered agent of these
1
We held oral argument at Ivy Tech Community College in Indianapolis on October 16, 2018. We thank
counsel for their outstanding written and oral advocacy and extend our appreciation to the faculty, staff, and
students of Ivy Tech for their exceptional hospitality.
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defendants, Noel filed the action in Marion County, asserting that it was a
preferred venue pursuant to T.R. 75(A)(4).
[5] On April 23, 2018, Appellants filed, along with their answer, a motion to
transfer venue, alleging that Marion County is not a preferred venue in this
case. Appellants requested that the case be transferred to Lawrence County.
Appellants filed with their motion certified copies of documents from the
Indiana Secretary of State’s records for the IU Health Entities. These
documents confirmed that the registered agent for these entities is Mary Beth
Claus at an address in Indianapolis, Indiana. The documents, however,
separately provided different addresses for the principal office. In this regard,
the document related to IU Bedford Hospital provided an address in Bedford,
Indiana, and the one related to IU Health SIP listed an address in Bloomington,
Indiana (that is, Lawrence County and Monroe County, respectively). Relying
on the newly enacted statute, I.C. § 23-0.5-4-12, Appellants argued that the
Marion County address of the IU Health Entities’ registered agent does not
make Marion County a county of preferred venue.
[6] Noel responded to the motion to transfer venue on May 8, 2018. Relying on
Indiana Supreme Court precedent, American Family, she argued that the term
“principal office”, as used in T.R. 75(A)(4), means the county where
corporations maintain their resident agent for service of process. Noel argued
that the new statute conflicts with T.R. 75, making the statute a nullity.
Appellants responded and argued that the two do not conflict and can be read
in harmony.
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[7] On May 11, 2018, the trial court issued an order summarily denying the motion
to transfer venue. Appellants now bring this interlocutory appeal pursuant to
Ind. Appellate Rule 14(A)(8).
Standard of Review
[8] The trial court made no factual findings in its order denying the motion to
transfer venue. Accordingly, we review the matter de novo. See Arkla Indus.,
Inc. v. Columbia St. Partners, Inc., 95 N.E.3d 194, 196 (Ind. Ct. App. 2018), trans.
denied.
Discussion & Decision
[9] T.R. 75(A) allows a case to be filed in any county in Indiana. The rule,
however, sets forth criteria for establishing preferred venue under ten separate
subsections. The rule does not create a priority among the subsections, and
there may be multiple preferred venues in a given case. If the action is
commenced in a preferred venue, a motion to transfer venue to another
preferred venue is not proper and must be denied by the trial court. Arkla
Indus., 95 N.E.2d at 197. On the other hand, if the complaint is not filed in a
preferred venue, the trial court is required to transfer the case to a preferred
venue upon proper request from a party. Id.
[10] T.R. 75(A)(4) is the subsection at issue here and provides in relevant part that
preferred venue lies in “the county where … the principal office of a defendant
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organization is located….” In this case, the parties dispute whether Marion
County is the county where the IU Health Entities’ principal offices are located.
[11] In 2006, in the case of American Family, 857 N.E.2d 971, the Indiana Supreme
Court interpreted and defined the term “principal office” as used in T.R. 75(A). 2
The Court held that “the term ‘principal office’ as used in subsections (4) and
(10) of Trial Rule 75(A) refers to a domestic or foreign corporation’s registered
office in Indiana.” American Family, 857 N.E.2d at 972. The Court observed
that the currently effective Indiana Rules of Trial Procedure, including T.R. 75,
were adopted in 1970. The Court interpreted the meaning of “principal office”
as the term was understood in 1970 and expressly refused to apply the
definition of “principal office” from Ind. Code § 23-1-20-19,3 a statute that was
enacted more than fifteen years after the adoption of T.R. 75. The Court
explained:
At the time Indiana’s corporation law required that both foreign
and domestic corporations maintain a “principal office in this
state” where a designated resident agent for service of process
could be found. Ind. Code § 25-204, 25-306 (Burns Code Ed.
Repl. 1969). It is that office to which Trial Rule 75 referred by
using the same phrase to provide in subsection (4) that preferred
venue lies in “the county where ... the principal office of a
defendant organization is located.” When the Business
2
The defendant, Ford Motor Company, did not have an office in Indiana but maintained a registered office
and agent in Marion County for service of process in the state.
3
I.C. § 23-1-20-19 defines “principal office” for purposes of the Business Corporation Act as “the office (in or
out of Indiana) so designated in the annual or biennial report where the principal executive offices of a
domestic or foreign corporation are located.”
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Corporation Act was adopted in 1986, what had formerly been
called the “principal office in this state” was designated the
“registered office.” I.C. § 23-1-24-1 (2004). This avoided the
confusion between “principal place of business,” which means
the corporate headquarters for purposes of federal diversity
jurisdiction under 28 U.S.C. section 1332, and “principal office,”
which means the place in Indiana where one serves the corporate
registered agent. By adopting the term “registered office,” the
Business Corporation Act did not intend to change the venue
rules for foreign corporations. Indeed, foreign corporations
qualified to do business under other laws, for example, the
Financial Institutions Act, to this day are required to have a
“principal office in this state.” See, e.g., I.C. § 28-1-22-12. In
short, at the time the current Rules of Trial Procedure were
proposed, the phrase “principal office” referred to what is
currently known as the “registered office” of a foreign
corporation qualified to do business in Indiana. Thus, if a
foreign corporation is qualified to do business in Indiana under
the Business Corporation Act, it will necessarily have a
“principal office in the state” – now called a “registered office” –
irrespective of where its corporate headquarters may be.
Accordingly, subsection (4) of Trial Rule 75 establishes preferred
venue in the county of the defendant organization’s registered
office.
American Family, 857 N.E.2d at 974-75 (footnotes omitted).
[12] Because the defendant in American Family had designated CT Corporation,
located in Marion County, as its registered office and agent, the Court
concluded that Marion County was the defendant’s principal office in the state
for venue purposes. Id. at 975. Accordingly, the Court determined that the
complaint was properly filed in Marion County, a preferred venue, and the trial
court erred in transferring the case to another county of preferred venue. Id.
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[13] The Court’s definition of “principal office” was recently applied in CTB, Inc. v.
Tunis, 95 N.E.3d 185, 189 (Ind. Ct. App. 2018), trans. denied. There, the
defendant was a domestic corporation with a registered office and agent in
Kosciusko County. Relying on American Family, this court stated that
“principal office” in the context of T.R. 75 is “the registered office according to
Section 23-1-24-1.” CTB, 95 N.E.3d at 189. This statute, which had just been
repealed,4 “required corporations to maintain a continuous ‘registered office’
and ‘registered agent’ in Indiana and that the address of the ‘registered agent’
must be the same as the ‘registered office.’” Id. at 189. Although CTB had
designated agents for service of process in Marion County pursuant to a federal
regulation, this court found that fact “completely irrelevant to the question of
venue under Trial Rule 75(A)(4).” Id. What mattered was the location of the
office of CTB’s registered agent under Indiana’s corporation law. Id.
[14] Extensive revisions to Indiana’s corporation law took effect on January 1, 2018,
with the repeal of numerous statutes and the adoption of new ones. Relevant
here is the adoption of I.C. § 23-0.5-4-12, which provides:
The designation or maintenance in Indiana of a registered agent
does not by itself create the basis for personal jurisdiction over
the represented entity in Indiana. The address of the agent does not
determine venue in an action or a proceeding involving the entity.
4
Because neither party had argued that the revisions to Indiana’s corporation law were relevant, the court
expressly indicated that it would not address the effect of the revisions. Id. at 187.
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(Emphasis supplied).5
[15] On appeal, Appellants and DTCI argue that Marion County is not a preferred
venue in this case and, therefore, the motion to transfer venue to Lawrence
County6 should have been granted by the trial court. First, Appellants argue
that American Family is not controlling authority in this case because its holding
should be limited to foreign companies. Unlike a foreign corporation, as in
American Family, Appellants observe that a domestic corporation is physically
located in Indiana. Thus, according to Appellants, a domestic corporation can
have both a principal office and a registered office/agent.
[16] This argument is a nonstarter and was not raised below. Although American
Family dealt with a foreign corporation, the Court’s analysis and interpretation
of T.R. 75(A)(4) was not dependent on whether the corporation was foreign or
domestic. In fact, the first sentence of the opinion states: “We hold that the
term ‘principal office’ as used in subsections (4) and (10) of Trial Rule 75(A)
refers to a domestic or foreign corporation’s registered office in Indiana.” Id. at
972. The holding’s application to domestic corporations, as well as foreign,
5
As part of the 2018 revisions, the legislature elected to enact a version of the Uniform Law Commission’s
Model Registered Agents Act, which recognizes the use by many corporations of commercial registered
agents with addresses “divorced from any real connection with the business activities of the represented
entity.” Model Registered Agents Act (amended 2011), prefatory note. I.C. § 23-0.5-4-12 is modeled after
Section 15 of the Model Registered Agents Act.
6
None of the parties disputes that Lawrence County is a county of preferred venue under T.R. 75(A).
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could not be more clear. Further, our court has applied the holding in the
context of a domestic corporation. See CTB, 95 N.E.3d at 189.
[17] Appellant’s most compelling argument, which DTCI also asserts, is that I.C. §
23-0.5-4-12 makes the address of a corporation’s registered agent irrelevant in
determining preferred venue. As set forth above, the statute provides in
relevant part: “The address of the agent does not determine venue in an action
or a proceeding involving the entity.”
[18] In addition to I.C. § 23-0.5-4-12, the newly adopted Uniform Business
Organizations Code sets out separate definitions for “registered agent” and
“principal office”. “Registered agent” is defined as “an agent of an entity
which is authorized to receive service of any process, notice, or demand
required or permitted by law to be served on the entity. The term includes a
commercial registered agent and a noncommercial registered agent.” I.C. § 23-
0.5-1.5-36. “Principal office” is defined as “the principal executive office of an
entity, whether or not the office is located in Indiana.”7 I.C. § 23-0.5-1.5-29.
Although foreign and domestic corporations are still required to “designate and
maintain a registered agent in this state”, I.C. § 23-0.5-4-1, corporations are no
longer statutorily required to “maintain in Indiana … [a] registered office”, as
previously required by I.C. § 23-1-24-1.
7
“Principal office” is similarly defined in I.C. § 23-1-20-19, which was not repealed. See footnote 3, supra.
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[19] Appellants argue that this new statutory scheme recognizes the important
distinction between the location of a corporation’s principal office and its
registered agent, as well as the reality that corporations now often use
commercial registered agents that are not otherwise associated with the
corporation. Appellants note that the Indiana Secretary of State requires that
each biennial report filed by a corporation include both the address of the
corporation’s principal office and the name and address of its registered agent.
According to DTCI, “[t]he Indiana legislature not only eliminated the legal
basis for the Supreme Court’s ruling in American Family, it also affirmatively
and unambiguously determined that the location of the resident agent was not a
basis for preferred venue.” DTCI Brief at 7.
[20] In response, Noel and ITLA do not dispute that I.C. § 23-0.5-4-12 is clear and
that if it is applicable here, Marion County would not be a county of preferred
venue. They argue, however, that the statute is a nullity because it directly
conflicts with T.R. 75 as the rule has been interpreted by our Supreme Court.
[21] It is a fundamental rule of law in our state that if a conflict exists between a
procedural statute and a rule adopted by the Supreme Court, the rule takes
precedence. Ind. Code § 34-8-1-3 provides:
The supreme court has authority to adopt, amend, and rescind
rules of court that govern and control practice and procedure in
all the courts of Indiana. These rules must be promulgated and
take effect under the rules adopted by the supreme court, and
thereafter all laws in conflict with the supreme court’s rules have
no further force or effect.
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See also Humbert v. Smith, 664 N.E.2d 356, 357 (Ind. 1996) (generally when a
statute conflicts with the Court’s rules, the statute is null and void; the Court,
however, decided to “assent to provisions the General Assembly has placed in
the paternity statute, treating them as an exception to the requirements of Rule
803(6)”); Bowyer v. Ind. Dep’t of Nat. Res., 798 N.E.2d 912, 917 (Ind. Ct. App.
2003) (“When a statute conflicts with the Indiana rules of trial procedure, the
rules of procedure govern, and phrases in statutes which are contrary to the
rules of procedure are considered a nullity.”) (quoting Jackson v. City of
Jeffersonville, 771 N.E.2d 703, 706 (Ind. Ct. App. 2002), trans. denied). Direct
conflict is not required. Rather,
[t]he rule and the statute need only be incompatible to the extent
that both could not apply in a given situation. A procedural
statute may not operate as an exception to a procedural rule
having general application. A procedural statute that does not
conflict with any of the trial rules may be held operative.
However, any statute conflicting with procedural rules enacted
by our supreme court shall have no force or effect.
Id. (citations omitted).
[22] In this same vein, T.R. 75(D) provides:
Other venue statutes superseded by this rule. Any provision of
these rules and any special or general statute relating to venue,
the place of trial or the authority of the court to hear the case
shall be subject to this rule, and the provisions of any statute
fixing more stringent rules thereon shall be ineffective. No
statute or rule fixing the place of trial shall be deemed a
requirement of jurisdiction.
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[23] Appellants and DTCI argue that there is no conflict between I.C. § 23-0.5-4-12
and T.R. 75 and that the statute does not fix more stringent rules regarding
venue than T.R. 75(A). They observe that the plain language of T.R. 75(A)(4)
makes no mention of the phrase “registered office,” only “principal office.”
They assert that the location of the registered office became relevant in the
context of T.R. 75(A)(4) only after American Family’s interpretation of the
phrase “principal office” based on a statute (I.C. § 23-1-24-1) that no longer
exists. According to Appellants, the new statute “merely provides guidance on
the interpretation of what is not a ‘principal office’ for purposes of T.R.75
(A)(4).” Appellants’ Brief at 15 (emphasis in original). That is, contrary to
American Family, the address of the registered agent does not establish preferred
venue.8
[24] Another panel of this court recently determined that I.C. § 23-0.5-4-12 is not
ineffective under T.R. 75(D). Morrison v. Vasquez, 107 N.E.3d 1103, 1109-10
(Ind. Ct. App. 2018) (rehearing denied October 22, 2018). The court stated:
Trial Rule 75(A)(4) provides that preferred venue lies in the
county where “the principal office of a defendant organization”
is located, and Ind. Code § 23-0.5-4-12 provides that the address
of the registered agent does not determine venue. Thus, Ind.
Code § 23-0.5-4-12 does not, by its express terms, fix more
8
In determining the “principal office” in the context of T.R. 75, Appellants would have courts look to the
statutory definitions of “principal office.” See I.C. § 23-0.5-1.5-29 (“the principal executive office of an entity,
whether or not the office is located in Indiana”); see also I.C. § 23-1-20-19 (similar definition application of
which American Family expressly rejected).
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stringent rules related to venue than the terms of Trial Rule
75(A)(4).
Id. at 1109 The court observed that the holding in American Family was
“premised on Indiana corporation law which has since been considerably
amended.” Id. The Morrison court explained:
Specifically, the Court in [American Family] observed that, at the
time Rule 75 was adopted in 1970, Indiana’s corporation law
required that corporations maintain a “principal office in this
state” where an agent for service of process could be found and
that, “[w]hen the Business Corporation Act was adopted in 1986,
what had formerly been called the ‘principal office in this state’
was designated the ‘registered office.’ I.C. § 23-1-24-1 (2004).”
857 N.E.2d at 974-975. The Court expressly found that, “[b]y
adopting the term ‘registered office,’ the Business Corporation
Act did not intend to change the venue rules for foreign
corporations.” Id. at 975 (emphasis added). Thus [American
Family] was based on the corporation law adopted in 1986 and
the fact the statutory provisions added by the legislature at that
time did not intend to change the venue rules. However,
Indiana’s corporation law was significantly amended by Pub.
Law No. 118-2017 (eff. Jan. 1, 2018). Among other changes, the
law repealed all of Ind. Code §§ 23-1-24, including Ind. Code §
23-1-24-1 upon which [American Family] depended, and added
the new article of Ind. Code §§ 23-0.5 which contains §§ 23-0.5-4
governing the designation and maintenance of registered agents,
including Ind. Code § 23-0.5-4-12 which, unlike the provisions
adopted in 1986, expressly intends a change to the venue rules.
See Pub. Law No. 118-2017, § 5 (enacting Ind. Code §§ 23-0.5), §
11 (repealing Ind. Code §§ 23-1-24). Thus the Indiana
corporation law upon which [American Family] was centered has
been extensively amended, and the specific statutory provision
relied upon in that case has been repealed and Ind. Code § 23-
0.5-4-12 has been added. We decline to find that Ind. Code § 23-
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0.5-4-12’s provision that the address of a registered agent does
not determine venue fixes a more stringent rule related to venue
than Trial Rule 75 or is ineffective pursuant to Trial Rule 75(D).
Id. at 1109-10 (footnotes omitted). We cannot agree with our colleagues’
determination regarding the effectiveness of the statute.
[25] I.C. § 23-0.5-4-12 clearly conflicts with T.R. 75(A)(4) as the rule has been
interpreted by our Supreme Court.9 As set forth above, in American Family, the
Court was concerned with the meaning of “principal office” as it was
understood at the time T.R. 75 was adopted in 1970. The Court determined
that this phrase, as used in the rule, referred to “the place in Indiana where one
serves the corporate registered agent.” American Family, 857 N.E.2d at 975. In
light of the 1986 amendments to our state’s corporation law, the Court
determined that this place was now statutorily referred to as “registered office”
rather than “principal office”. Despite the changed nomenclature, the Court
stayed true to the original meaning of the term “principal office” in the rule.
[26] Indiana corporation law has been substantially amended once again and in
apparent recognition of the use of commercial registered agents, corporations
are no longer required to maintain a “registered office” in the state, as
previously mandated by I.C. § 23-1-24-1 (now repealed). Corporations,
9
The Comment to Section 15 of the Model Registered Agents Act, after which I.C. § 23-0.5-4-12 is based,
warns: “This section may be inconsistent with other law or procedural rules in a state, and thus existing law
on venue should be reviewed when this act is considered for adoption in a state.”
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however, must “designate and maintain a registered agent in this state”. I.C. §
23-0.5-4-1(a). “Registered agent” is statutorily defined as “an agent of an entity
which is authorized to receive service of any process, notice, or demand
required or permitted by law to be served on the entity. The term includes a
commercial registered agent and a noncommercial registered agent.” I.C. § 23-
0.5-1.5-36. Thus, although the statutes have changed, a corporation still must
have a registered agent in Indiana authorized to receive service of process. The
address of the corporation’s registered agent more closely comports with the
meaning of “principal office” as the term was understood in 1970 than the
current statutory definitions of “principal office,” one of which was expressly
rejected in American Family.
[27] We reiterate that the Supreme Court has the “authority to adopt, amend, and
rescind rules of court that govern and control practice and procedure in all the
courts of Indiana.” I.C. § 34-8-1-3. Laws in conflict with rules promulgated by
the Court “have no further force or effect.” Id. Further, procedural rules
adopted by the Court are regularly interpreted by the Court, and these cases
also “take precedence over any conflicting statutes.” Augustine v. First Fed. Sav.
& Loan Ass’n of Gary, 384 N.E.2d 1018, 1020 (Ind. 1979) (“The procedural rules
and cases decided by this Court take precedence over any conflicting statutes”).
We hold that I.C. § 23-0.5-4-12 conflicts with T.R. 75(A)(4) as interpreted by
the Indiana Supreme Court and that the statute is, therefore, a nullity.
[28] American Family remains controlling law in Indiana. If the Indiana corporate
community is dissatisfied with the Court’s interpretation of the rule, recourse
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lies with the Indiana Supreme Court Committee on Rules of Practice and
Procedure,10 not the legislature. See Ind. Trial Rule 80 (establishing the
committee and setting forth procedures for amending Indiana Rules of Court).
[29] Affirmed.
Bradford, J. and Tavitas, J., concur.
10
Appellants and DTCI observe that registered agents are now commonly business entities with no
connection to the corporation other than accepting service of process. We acknowledge the tenuous
connection that often exists today, but such does not allow us to invade the exclusive province of our
Supreme Court and tinker with T.R. 75(A)(4). Further, it is well established that convenience alone is not a
sufficient reason to transfer venue in Indiana. See Lake Holiday Conservancy v. Davidson, 808 N.E.2d 119, 124
(Ind. Ct. App. 2004) (“Any complaint about the equity … of Rule 75(A)(5) must be directed to the Supreme
Court Committee on Rules of Practice and Procedure…. We will not impose a strained construction upon a
clear rule in order to reach what Lake Holiday believes is the more reasonable result.”); see also Meridian Mut.
Ins. Co. v. Harter, 671 N.E.2d 861, 864 (Ind. 1996) (“The balance of convenience…is not sufficient to disturb
the plaintiffs’ selection of a forum that meets preferred venue requirements.”).
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