COA splits, allows suit involving West Coast parties to proceed in Indiana

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Parties from the West Coast who entered into two contracts with an Indiana company had sufficient contacts within the state to give an Indiana trial court jurisdiction over them, the Court of Appeals of Indiana ruled in a split decision affirming a lower court’s denial of a motion to dismiss.

American Kart Track Promoters Association is an Indiana corporation that offers promotion and insurance services to motorsports tracks and clubs. Tim Wilkerson is the association’s president.

Northwest Karting Association is an Oregon nonprofit comprised of member tracks and clubs, including Spokane Kart Racing Association, a Washington nonprofit. Mike Schorn is the vice president of Northwest, and Tim Draggoo was the president of Northwest and Spokane before his death.

In 2018, Schorn and Draggoo contacted Wilkerson about AKTPA putting together a bid for insurance for members of Northwest to vote on at its annual meeting.

In early 2019, Northwest and Spokane applied for insurance coverage from and membership with AKTPA. AKTPA accepted the applications and issued certificates of insurance.

AKTPA’s line of insurance requires the tracking of participant totals for each event, which is done by providing members with wristbands.

According to the contracts, the AKTPA memberships and insurance automatically renewed each Jan. 1. Northwest and Spokane were required to return any unused wristbands at the end of each racing season, or else they had to pay for the wristbands that were not returned.

The two sides later had a dispute about unreturned wristbands. In October 2021, AKTPA sued Northwest and Spokane in Indiana state court on six counts, including breach of contract and criminal conversion.

The complaint alleged that the Marion Superior Court had personal jurisdiction over the out-of-state parties because Spokane and Northwest applied for membership and insurance through AKTPA; signed documents agreeing to submit certain paperwork and return unused armbands; and agreed to submit regular payments to AKTPA.

In December 2021, the out-of-state parties moved to dismiss the complaint under Indiana Trial Rule 12(B)(2), alleging the Indiana trial court did not have personal jurisdiction over them. After a virtual hearing, the trial court denied the motion to dismiss.

The out-of-state parties sought and received permission to bring an interlocutory appeal, claiming the trial court had neither general nor specific jurisdiction over them.

Citing Ford Motor Co. v. Mont. Eighth Jud. Dist. Court, 141 S. Ct. 1017, 1024 (2021), the Court of Appeals said a state court can exercise general jurisdiction only when a defendant is “essentially at home” in the state.

With the out-of-state parties being based in Oregon and Washington, the COA ruled none of them are “at home” in Indiana, so the trial court did not have general jurisdiction over them.

But that was not the end of the appellate analysis. The COA also noted specific jurisdiction, as laid out in Ford, covers defendants “less intimately connected” with a state, though for a narrower class of claims.

The out-of-state parties argued that the fact that they entered into a contract with the Indiana parties wasn’t enough to subject them to a lawsuit in Indiana, and that subjecting them to suit in Indiana means the state would have “personal jurisdiction over any out-of-state party who negotiates a deal with an Indiana company.”

The COA cited Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985), in determining that while a contract alone doesn’t automatically establish the sufficient minimum contact required for jurisdiction, other factors such as prior negotiations and the terms of the contract can be considered.

“The contracts were intended to form long-term relationships through the automatic year-to-year renewal terms,” the opinion says. “The West Coast Parties took advantage of the services offered by AKTPA.”

The court noted the out-of-state parties corresponded with AKTPA around 100 times about things such as event safety, sponsorship and promotion strategies. They also sent payments to AKTPA.

“Given that the West Coast parties entered into contracts with AKTPA for insurance, membership, and event-promotion services and then heavily relied on AKTPA in Indiana to provide them with services, we conclude that the West Coast Parties purposely availed themselves of the privilege of conducting activities within Indiana,” the opinion says.

The out-of-state parties argued the case at hand is like Wolf’s Marine, Inc. v. Brar, 3 N.E.3d 12 (Ind. Ct. App. 2014). In that case, the Court of Appeals ruled a trial court didn’t have jurisdiction over an out-of-state boating company.

The Court of Appeals disagreed with that argument, saying there are more differences than similarities between the two cases.

The West Coast parties also argued that even if the trial court had personal jurisdiction over them, exercising that jurisdiction would not be reasonable given they are more than 1,000 miles away from Indiana and are nonprofits.

The Court of Appeals disagreed on that issue, as well, ruling the litigation isn’t so difficult and inconvenient that the West Coast parties are unfairly at a disadvantage to the Indiana parties. Plus, the court noted many proceedings can be conducted remotely, like the motion-to-dismiss hearing was.

Judge Nancy Vaidik wrote the opinion. Judge Peter Foley concurred.

In a dissenting opinion, Judge Elizabeth Tavitas wrote the out-of-state parties didn’t have sufficient minimum contacts within Indiana to give Indiana courts personal jurisdiction over them.

Tavitas also agreed with the out-of-state parties’ argument that even if their contacts were sufficient, exercise of such jurisdiction would be unreasonable.

“The burden on the defendant West Coast Parties appears to be heavy,” Tavitas wrote. “They are non-profit corporations located over 1,000 miles away from Indiana. Indiana appears to have a minimal interest in adjudicating this dispute.”

The case is Spokane Kart Racing Association, Northwest Karting Association f/k/a NW Gold Cup, and Mike Schorn v. American Kart Track Promoters Association, Inc., and Tim Wilkerson, 22A-PL-1951.

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