ILNews

COA: Court has personal jurisdiction over CIDs

Jennifer Nelson
January 1, 2008
Keywords
Back to TopCommentsE-mailPrintBookmark and Share
Indiana trial courts can assert personal jurisdiction over out-of-state companies for the purposes of enforcing an Indiana Attorney General's petition to enforce a civil investigative demand, ruled the Indiana Court of Appeals today.

In a case of first impression, the appellate court was asked to determine whether a trial court lacked personal jurisdiction over an Ohio company that had franchises located in but not registered in Indiana, and thus erred by granting the Attorney General's petition to enforce a civil investigative demand (CID).

"As the issue before us is one of jurisdiction, we leave it to the trial court to address the issue of scope pursuant to its powers as outlined in the statute. The trial court committed no error in asserting personal jurisdiction over Everdry," wrote Judge Terry Crone.

In Everdry Marketing and Management, Inc. v. Steve Carter, Attorney General of Indiana, No. 49A02-0706-CV-452, Everdry, an Ohio corporation that provides waterproofing services for homes, had franchises operating in Fort Wayne and Indianapolis. It had not filed a Uniform Franchise Registration Application with Indiana before franchising the company. After receiving complaints about the Indiana franchises failing to honor "lifetime warranties" on Everdry's waterproofing systems, the Attorney General's office found Everdry's Web site contained a very similar warranty statement as the one that appeared in the customer's contracts. Pursuant to Indiana Code Section 4-6-3-3, the Attorney General's office issued a CID upon Everdry at its Ohio office. CIDs are a pre-litigation tool to determine whether an Indiana law has been violated and address whether a subject has certain information relevant to the investigation.

The CID alleged the company may be in possession of documentary material or knowledge of fact relevant to an investigation being conducted by the Attorney General's Consumer Protection Division and an investigation sought to determine if Everdry misrepresented its warranty to customers.

A meeting took place between Everdry's counsel and the Attorney General's office. Afterwards, the company contacted customers to arrange service and revoked the franchise rights of the Indiana companies.

On June 2, 2006, the Attorney General's office filed a petition in Marion Superior Court to enforce the CID; five days later Everdry filed with Indiana a Uniform Franchise Registration Application. At the end of June, the company filed a petition to dismiss the petition to enforce the CID, claiming the trial court lacked personal jurisdiction over the Ohio company. In April 2007, the trial court heard evidence on the Attorney General's petition and entered an order in May summarily granting the petition.

The Court of Appeals unanimously agreed with the Attorney General that the Indiana trial court had personal jurisdiction over Everdry regarding the enforcement of the CID. After the Attorney General's office first sent the CID to Everdry, but before the trial court affirmed the petition to enforce it, Everdry filed its Indiana Uniform Franchise Registration Application. The Indiana registration contained specific language indicating Everdry's contractual consent to jurisdiction.

"Just as the general appearance, entered after the lawsuit is filed, constitutes consent to jurisdiction, a registration filed after the initial issuance of the CID and prior to an enforcement order constitutes consent to the court's jurisdiction," Judge Crone wrote.

Next, the appellate court examined Indiana Trial Rule 4.4(A) which names eight specific acts that can serve as a basis for an Indiana trial court's assertion of personal jurisdiction over a nonresident, including certain minimum contacts with the forum state by the nonresident defendant.

On top of the Indiana registration, Everdry engaged in significant interaction with its Indiana franchisees and their customers, the franchisees used Everdry's products, and the warranties used by their franchisees were the same as the warranty on Everdry's Web site, which is sufficient contact to establish jurisdiction.

The appellate court had to determine the operative date of inquiry as it applies to jurisdictional matters in the context of a CID; the court determined the operative date of inquiry regarding jurisdictional contacts should be the date the trial court orders the enforcement of the CID. Before the enforcement order, the CID is just a request from the Attorney General and not subject to penalties for noncompliance. Once the trial court orders enforcement, noncompliance can be enforced by a contempt citation, Judge Crone wrote.

Everdry also contended in its appeal that the scope of the CID was impermissibly broad because it sought privileged information. The section of Indiana Code dealing with CIDs does provide some safeguards to protect privileged information, such as allowing a company to not produce information for a CID that would be "privileged from disclosure if demanded by a subpoena duces tecum issued by a court in aid of a grand jury investigation," and the trial court is able to modify a CID to protect the respondent's right to confidentiality, he wrote.
ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I can understand a 10 yr suspension for drinking and driving and not following the rules,but don't you think the people who compleate their sentences and are trying to be good people of their community,and are on the right path should be able to obtain a drivers license to do as they please.We as a state should encourage good behavior instead of saying well you did all your time but we can't give you a license come on.When is a persons time served than cause from where I'm standing,its still a punishment,when u can't have the freedom to go where ever you want to in car,truck ,motorcycle,maybe their should be better programs for people instead of just throwing them away like daily trash,then expecting them to change because they we in jail or prison for x amount of yrs.Everyone should look around because we all pay each others bills,and keep each other in business..better knowledge equals better community equals better people...just my 2 cents

  2. I was wondering about the 6 million put aside for common attorney fees?does that mean that if you are a plaintiff your attorney fees will be partially covered?

  3. My situation was hopeless me and my husband was on the verge of divorce. I was in a awful state and felt that I was not able to cope with life any longer. I found out about this great spell caster drlawrencespelltemple@hotmail.com and tried him. Well, he did return and now we are doing well again, more than ever before. Thank you so much Drlawrencespelltemple@hotmail.comi will forever be grateful to you Drlawrencespelltemple@hotmail.com

  4. I expressed my thought in the title, long as it was. I am shocked that there is ever immunity from accountability for ANY Government agency. That appears to violate every principle in the US Constitution, which exists to limit Government power and to ensure Government accountability. I don't know how many cases of legitimate child abuse exist, but in the few cases in which I knew the people involved, in every example an anonymous caller used DCS as their personal weapon to strike at innocent people over trivial disagreements that had no connection with any facts. Given that the system is vulnerable to abuse, and given the extreme harm any action by DCS causes to families, I would assume any degree of failure to comply with the smallest infraction of personal rights would result in mandatory review. Even one day of parent-child separation in the absence of reasonable cause for a felony arrest should result in severe penalties to those involved in the action. It appears to me, that like all bureaucracies, DCS is prone to interpret every case as legitimate. This is not an accusation against DCS. It is a statement about the nature of bureaucracies, and the need for ADDED scrutiny of all bureaucratic actions. Frankly, I question the constitutionality of bureaucracies in general, because their power is delegated, and therefore unaccountable. No Government action can be unaccountable if we want to avoid its eventual degeneration into irrelevance and lawlessness, and the law of the jungle. Our Constitution is the source of all Government power, and it is the contract that legitimizes all Government power. To the extent that its various protections against intrusion are set aside, so is the power afforded by that contract. Eventually overstepping the limits of power eliminates that power, as a law of nature. Even total tyranny eventually crumbles to nothing.

  5. Being dedicated to a genre keeps it alive until the masses catch up to the "trend." Kent and Bill are keepin' it LIVE!! Thank you gentlemen..you know your JAZZ.

ADVERTISEMENT