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COA allows Indiana-Arkansas breach of contract dispute to continue in Indiana

August 6, 2018

A breach of contract dispute between business owners in Indiana and Arkansas will continue in Indiana courts after the Indiana Court of Appeals reversed the dismissal of the Indiana-filed complaint for lack of personal jurisdiction.

Beverly Oswald is the sole owner of Eville Louie, LLC, which owns and operates Bar Louie restaurants and is headquartered in Indiana. In January 2010, Eville Louie owned and operated two Bar Louie Restaurants in the Little Rock, Arkansas area—Little Rock Louie, LLC, and North Rock Louie, LLC.

Oswald hired Tarek Shehadeh as the Little Rock Louie general manager after conducting interviews that took place in Indiana. As part of his duties as general manager, Shehadeh repeatedly contacted Oswald and other Indiana residents and traveled to Indiana to attend Bar Louie management meetings.

In 2015, Shehadeh and Falon Vela contacted Oswald in Indiana and expressed their interest in buying Little Rock Louie and North Rock Louie, and Oswald agree. The sale held that Shehadeh and Vela “assume[d] and agree[d] to pay all lender obligations relative to both businesses,” including eight promissory notes held by Indiana residents or Indiana corporations.

While operating the restaurants, Shehadeh and Vela continued to use an Indiana payroll company, an Indiana insurance agent and Indiana accountants. Shehadeh also “received corporate mail in Indiana” through October 2017.

But in January 2017, Oswald sued Shehadeh and Vela in Hamilton County for breach of contract, but Shehadeh and Vela separately moved for the case to be dismissed for lack of personal jurisdiction. The Hamilton Superior Court agreed, but the Indiana Court of Appeals reversed on Monday.

Oswald argued on appeal that the trial court erred when it granted the motions to dismiss because there were sufficient minimum contacts to establish personal jurisdiction over Shehadeh and Vela, and that the pair failed to prove that exercise of personal jurisdiction over them was unreasonable.

Though the appellate court agreed with Shehadeh that “enter[ing] into a contract with an Indiana resident, is, without more, insufficient to subject him to suit in Indiana,” it found there was more than just a contract in the matter – there were multiple contacts with Indiana, some of which were still ongoing during the case.

The appellate court noted Shehadeh solicited Oswald in Indiana to sell her restaurant, and because because they continued multiple business relationships in Indiana, Oswald met her burden of proving Shehadeh and Vela had sufficient minimum contacts related to the contract in Indiana for there to be specific personal jurisdiction there.

The court also found Shehadeh failed to show how proceeding in Indiana would burden him and whether Indiana had an interest in adjudicating the dispute as the forum state. He also presented other unrelated arguments to the issue at hand, failing to address the remaining factors of the test. Ultimately, the appellate court concluded Shehadeh failed to meet his burden to present a compelling case for why litigating the dispute in Indiana was unreasonable.

Thus, the case of Beverly K. Oswald v. Tarek Shehadeh and Falon Vela, 29A02-1711-PL-2627 was reversed and remanded for further proceedings in Indiana.

 

 

 

 

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