`

COA: Defrauded Logansport business can’t sue Michigan law firms here

September 16, 2016

A Logansport businessman who was defrauded of more than $20,000 cannot use Indiana courts to sue the Michigan law firm whose client was later convicted of wire fraud, the Indiana Court of Appeals ruled Friday.

Jerry Arnold, who owns Arnold’s Jewelry and Gifts, signed papers in Indiana and was assured he would receive a line of credit of $850,000 through Michigan Commercial Resource Locator Inc. agent Sebastian Restum. But to do so, Arnold was required to pay an upfront loan-processing fee of $20,700, which went into a Michigan law firm’s Interest on Lawyer Trust Account. According to the agreement, Arnold would be refunded the money if the line of credit wasn’t secured.

Eight months later, Arnold still had not received the line of credit, and the FBI charged Rostum with wire fraud. He was convicted and sentenced to 51 months in prison and ordered to pay restitution of almost $5 million for a mortgage fraud scheme.

After the firms refused to refund Arnold’s money, he sued in Cass Circuit Court. The trial court dismissed the suit for lack of personal jurisdiction, finding the contacts in Indiana between Arnold and the law firms were not continuous and systematic to establish general jurisdiction under the tests established in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985). The court also found the contract Arnold signed specified Michigan as the forum state and that he was capable of maintaining a suit there.

“Despite the fact that the alleged tortious acts occurred in Indiana, the trial court found that the Appellees and witnesses were in Michigan and that discovery and services of process would be done in Michigan.  In addition, there is a pending criminal complaint filed in a Michigan federal court relating to the alleged fraud as cited in Arnold’s Complaint,” Judge Patricia Riley wrote for the panel.

“Overall, we conclude that exercising jurisdiction over the Appellees would offend notions of fairness and reasonableness.  Accordingly, the trial court properly dismissed Arnold’s Complaint for lack of personal jurisdiction.” The case is Jerry Arnold d/b/a Arnold's Jewelry and Gifts, Inc. v. Marcellus Long, Jr., Marcellus Long, Jr., P.C. a/k/a Law Office of Marcellus Long, P.L.L.C., and Hatchett Dewalt & Hatchett, P.L.L.C., et al., 09A02-1511-PL-2101.
 

ADVERTISEMENT

Recent Articles by Dave Stafford