ILNews

COA: Court has personal jurisdiction over CIDs

Jennifer Nelson
January 1, 2008
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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.
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  1. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  2. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  3. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  4. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

  5. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

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