ROBERT D. STEPHENS, RYAN MOE, THOMAS THEOHARY, and LAW ENFORCEMENT TECHNOLOGIES, INC., Appellants-Defendants,
BRIAN A. COSTA and AMY COSTA, Appellees-Plaintiffs
These opinions are not precedents and cannot be cited or relied upon unless used when establishing res judicata or collateral estoppel or in actions between the same party. Indiana Rules of Appellate Procedure 65(D).
APPEAL FROM THE ST. JOSEPH SUPERIOR COURT. The Honorable Jenny Pitts Manier, Judge. Cause No. 71D05-0909-CT-188.
ATTORNEY FOR APPELLANTS ROBERT D. STEPHENS and THOMAS THEOHARY: CHARLES E. DAVIS, Davis Law, LLC, Fort Wayne, Indiana.
ATTORNEYS FOR APPELLEES: RICHARD W. MORGAN, JEROME W. McKEEVER, Pfeifer, Morgan & Stesiak, South Bend, Indiana.
CRONE, Judge. BAKER, J., and NAJAM, J., concur.
MEMORANDUM DECISION - NOT FOR PUBLICATION
St. Joseph County SWAT team Corporal Brian A. Costa was injured during a sales demonstration of civilian- and military-use distraction devices conducted by representatives of Law Enforcement Technologies, Inc. ("LET"), an out-of-state corporation. Brian and his wife, Amy, filed a lawsuit against LET, its president, Robert D. Stephens, and corporate officers Thomas Theohary and Ryan Moe, among others, alleging negligence and loss of consortium. The trial court clerk mailed a copy of the summons and complaint to Theohary, a Maine resident, at LET's address in Colorado; Moe signed the certified mail receipt. An attorney filed an appearance on behalf of LET, Stephens, Theohary, and Moe but later withdrew. The clerk mailed additional documents to Theohary at LET's address, and they were returned as undeliverable. The Costas' counsel mailed several documents, including a request for admissions, to Theohary in Maine; he signed the certified mail receipts but did not respond to the request for admissions. Theohary and Moe failed to appear at trial, and Stephens appeared pro se. The trial court found Theohary and Moe in default and entered judgment jointly and severally against Stephens, Theohary, Moe, and LET and in favor of the Costas. Theohary filed a motion to correct error and a motion for relief from judgment, asserting that the default judgment against him was void for lack of personal jurisdiction. Stephens also filed a motion to correct error. The trial court denied Theohary's and Stephens's motions.
On appeal, Theohary contends that the trial court erred in denying his motions. He contends that the trial court never acquired personal jurisdiction over him because he never received service of process; he never authorized the attorney to enter an appearance for him; and he does not have sufficient minimum contacts with Indiana. We agree with Theohary that the trial court never acquired personal jurisdiction over him because he never received service of process and he has sufficiently established that he did not authorize the attorney to enter an appearance for him. We conclude, however, that Theohary does have sufficient minimum contacts with Indiana, and therefore we reverse and remand for further proceedings as to Theohary. Stephens contends that the trial court's judgment on the Costas' claims is not supported by sufficient evidence and that he cannot be held personally liable. We disagree on both counts and therefore affirm the trial court's judgment as to Stephens.
Facts and Procedural History
The relevant facts most favorable to the trial court's rulings are these. LET was incorporated in New Mexico and has its principal place of business in Colorado Springs, Colorado. LET researches and develops products for law enforcement and the military. In late 2008 or early 2009, LET's president, Stephens, and his fellow corporate officers Theohary and Moe conducted a demonstration of LET's civilian-use distraction devices, also known as diversionary devices or flash bangs, for members of the St. Joseph County SWAT team in Mishawaka. The SWAT team was interested in purchasing LET's distraction devices because of the "selling point" that they would "lay flat" and not "launch" when detonated. Tr. at 15.
On June 2, 2009, Stephens, Theohary, and Moe conducted a second demonstration for the SWAT team inside a Mishawaka police station. Brian did not attend the first demonstration but was present for the second demonstration. Moe showed a PowerPoint presentation upstairs and then went to the downstairs shooting range and detonated two civilian-use devices (known as the R4) and two prototype military-use devices (known as the R5), which were still under development. Brian then detonated one of the SWAT team's devices, which team members felt was more effective than the R4 device. Stephens, Theohary, and Moe then had a discussion about detonating a third R5 device. Moe deployed the device, which landed approximately a foot outside the designated deployment area and exploded into pieces, injuring Brian's leg. Due to his injuries, Brian did not return to work until September 2009 and was limited to light duty until February 2010.
On September 17, 2009, the Costas filed a complaint for negligence and loss of consortium against LET, Stephens, Moe, Theohary, and LET representative Marcus Caldwell in St. Joseph Superior Court. On September 21, 2009, the court clerk issued complaints and summonses to the defendants. Theohary's complaint and summons, which listed his title as " Engineer," were sent via certified mail to LET's address in Colorado Springs. Appellees' App. at 9. The chronological case summary (" CCS" ) states, " CERTIFIED MAIL TO THOMAS THEOHARY SIGNED 09-25-09." Appellants' App. at 1. A copy of the certified mail receipt is not in the record before us. At the hearing on Theohary's motion to correct error/motion for relief from judgment, Theohary's counsel stated that Moe had signed the receipt, and the Costas' counsel did not dispute this. Tr. at 114.
On October 15, 2009, attorney Clint Zalas entered an appearance on behalf of all defendants, including Theohary. Also on that date, Zalas filed an answer and a jury trial demand and asserted the affirmative defense of incurred risk. Zalas did not assert the defenses of insufficient service of process or lack of personal jurisdiction.
On November 21, 2011, Zalas filed a motion for leave to withdraw his appearance, which reads in relevant part as follows:
1. There has been a breakdown in the attorney-client relationship rendering any further representation unreasonably difficult.
2. Counsel has provided at least fifteen (15) days written notification to Mr. Stephens, Ryan Moe, Thomas Theohary, Marcus Caldwell and Law Enforcement Technologies, Inc., of his intent to withdraw from this matter. The primary contact for all of the aforementioned individuals and entity is Robert Stephens [, whose last known address was in Mishawaka].
Appellants' App. at 12. Theohary was not listed on the certificate of service for Zalas's motion. On November 23, 2011, the trial court issued an order setting a hearing on Zalas's motion for December 6, 2011. The clerk mailed a copy of the order to Theohary at LET's Colorado Springs address; the letter was returned as undeliverable. On December 2, 2011, the trial court reset the hearing for December 16. After the hearing, the trial court issued an order granting Zalas's motion to withdraw. The order does not appear in the record before us, and nothing indicates whether (or to whom) a copy of the order was mailed.
On September 11, 2012, the Costas sent eight requests for admissions to Theohary via certified mail to an address in York Harbor, Maine. On September 24, 2012, Theohary received and signed for the requests, to which he never responded. On November 2, 2012, the Costas filed a motion to deem the requests admitted pursuant to Indiana Trial Rule 36. The trial court subsequently granted the motion.
On November 6, 2012, the Costas mailed to Theohary their contentions, witnesses, and exhibits list and a copy of the trial court's pretrial order dated September 26, 2011. Among other things, the pretrial order set a discovery deadline of November 4, 2012, ordered mediation to be completed by November 4, 2012, set a pretrial conference for November 20, 2012, and set a jury trial for December 4, 2012. The Costas' cover letter advised Theohary that he had signed for the requests for admission on September 24, 2012, but had failed to respond. The foregoing were sent via certified mail to Theohary's York Harbor address. On November 16, 2012, Theohary signed the certified mailing receipt, on which the York Harbor address was crossed out and replaced with a handwritten address in Bradenton, Florida. At the November 20 pretrial conference, Moe and Theohary failed to appear, and Stephens appeared pro se. Stephens filed a jury trial waiver, and a bench trial was set for December 5, 2012.
At trial, the Costas appeared personally and by counsel. Stephens appeared pro se and stated that he was " here on behalf of myself but also fellow officers of the corporation Tom Theohary and Ryan Moe." Tr. at 6. The trial court informed Stephens, who is not an attorney, that he could represent only himself and not Theohary, Moe, or LET. The court found that Theohary, Moe, and LET had failed to appear and were defaulted. The court then heard evidence from both sides, including testimony from the Costas and Stephens. Stephens testified that he owned fifteen percent of LET in 2009 and that both Theohary and Moe had " very small percentage ownerships" in the company. Id. at 38. According to Stephens, " Mr. Theohary was an unpaid consultant and Mr. Moe, while an employee of the company, was truly not being paid for ... a good 10 months before this incident happened." Id. Stephens also testified, " [A]s officers of the corporation we showed up [at the Mishawaka police station] to demonstrate the device for a second time. I recognize my fellow officers are not here to represent their own interest. I can tell you they're good guys, honorable fellas." Id. at 97. At the close of evidence, the trial court took the matter under advisement.
On December 18, 2012, the court issued an order directing the Costas' counsel to submit a posttrial brief by January 30, 2013. The Costas' counsel filed a brief on January 29, 2013. On February 6, 2013, the trial court entered judgment jointly and severally against Stephens, Moe, Theohary, and LET and in favor of Brian and Amy for $65,000 and $20,000 respectively, plus costs. On February 8, 2013, Stephens filed a posttrial reply brief. On February 11, 2013, the trial court issued a judgment stating that it had reviewed Stephens's brief and determining that its earlier judgment remained " in full force and effect." Appellants' App. at 9. The CCS indicates that a copy of at least one of the judgments was mailed to Theohary at LET's Colorado Springs address and was returned not deliverable as addressed on February 15, 2013. Id. at 6.
On March 6, 2013, Theohary, by counsel, filed a motion to correct error and motion for relief from judgment, along with a supporting affidavit. Among other things, Theohary's affidavit states that he was " was not properly served with a summons in this case" because LET was not his place of business; that he did not authorize anyone at LET to accept service of the summons for him, and no one forwarded it to him; that he was a resident of and employed in Maine at the time of Brian's injury and the filing of the complaint; that he did not authorize Zalas to represent him and never " paid or retained" or spoke or corresponded with him; that he was never served with any notice " that Zalas was withdrawing as counsel for anyone" ; that he has never been an engineer, employee, or officer of LET, but merely an " independent business consultant" who had provided a business plan to LET; that he " had nothing to do with the manufacture, design, assembly or proper use of the product that injured" Brian; that LET did not pay him for his June 2009 visit to Mishawaka, which was done solely " out of friendship for Mr. Stephens" ; that he " was present during some discussion by Ryan Moe to use that final device" but did not consent to or authorize its use and " had no authority one way or the other to agree or disagree with the decision" ; that he " was never asked by anyone to waive [his] right to jury trial" ; and that he " did not appear at the trial as [he] had no knowledge of proper service to bring [him] into the case other than just [his] name being used[.]" Id. at 48-51. In support of his affidavit, Theohary submitted LET's application to the Colorado secretary of state's office for authority to transact business in Colorado. The application does not list Theohary (or Stephens or Moe) as officers of the corporation and was filed with the secretary of state in late 2001, over seven years before Costa was injured.
On March 8, 2013, Stephens filed a pro se motion to correct error. The Costas filed responses to Theohary's and Stephens's motions. On April 18, 2013, the trial court held a hearing on the motions, at which Theohary appeared by counsel and Stephens appeared pro se. On April 23, 2013, the trial court issued an order summarily denying the motions. Theohary and Stephens, both represented by counsel, now appeal.
Discussion and Decision
Section 1 -- Default Judgment Against Theohary
Theohary challenges the default judgment on the basis that it was rendered without personal jurisdiction over him and is therefore void. See Citimortgage, Inc. v. Barabas, 975 N.E.2d 805, 816 (Ind. 2012) (" A judgment issued without personal jurisdiction is void[.]" ); see also Ind. Trial Rule 60(B)(6) (providing for relief from judgments that are " void" ). " A void judgment is a complete nullity and may be attacked at any time." Grabowski v. Waters, 901 N.E.2d 560, 563 (Ind.Ct.App. 2009), trans. denied . Generally,
[t]he decision whether to set aside a default judgment is given substantial deference on appeal. We will not reweigh the evidence or substitute our judgment for the judgment of the trial court. Default judgments are not generally favored in Indiana, for it has long been the preferred policy of this state that courts decide a controversy on its merits. Any doubt of the propriety of a default judgment should be resolved in favor of the defaulted party.
Fitzpatrick v. Kenneth J. Allen & Assocs., P.C., 913 N.E.2d 255, 263 (Ind.Ct.App. 2009) (citations omitted).
Notwithstanding the deference that we traditionally give trial courts with respect to default judgments, we note that " [p]ersonal jurisdiction is a question of law. As with other questions of law, a determination of the existence of personal jurisdiction is entitled to de novo review by appellate courts. This court does not defer to the trial court's legal conclusion as to whether personal jurisdiction exists." Grabowski, 901 N.E.2d at 563 (citations omitted).
Once the party contesting jurisdiction, usually the defendant, challenges the lack of personal jurisdiction, the plaintiff must present evidence of a court's personal jurisdiction over the defendant, but the defendant ultimately bears the burden of proving the lack of personal jurisdiction by a preponderance of the evidence, unless that lack is apparent on the face of the complaint.
Norris v. Personal Fin., 957 N.E.2d 1002, 1007 (Ind.Ct.App. 2011) (quotation marks omitted). Theohary's personal jurisdiction claim entails three separate arguments: one, that he never received service of process; two, that he did not authorize Zalas to enter an appearance on his behalf; and three, that he does not have sufficient minimum contacts with Indiana. We address each in turn.
Section 1.1 -- Service of Process
Indiana Trial Rule 4(A) states, " The court acquires jurisdiction over a party or person who under these rules commences or joins in the action, is served with summons or enters an appearance, or who is subjected to the power of the court under any other law." " Without effective service of process, a trial court does not obtain personal jurisdiction over a defendant." Norris, 957 N.E.2d at 1007. " As a rule, actual knowledge of the suit does not satisfy due process or give the court in personam jurisdiction." Citimortgage, 975 N.E.2d at 817 (quotation marks omitted).
Indiana Trial Rule 4.4 governs service upon nonresident persons " for acts done in this state or having an effect in this state." Trial Rule 4.4(B) provides that an individual subject to the jurisdiction of Indiana courts may be served with summons as provided by Trial Rule 4.1. Trial Rule 4.1(A) reads in pertinent part,
Service may be made upon an individual, or an individual acting in a representative capacity, by:
(1) sending a copy of the summons and complaint by registered or certified mail or other public means by which a written acknowledgment of receipt may be requested and obtained to his residence, place of business or employment with return receipt requested and returned showing receipt of the letter; or
(2) delivering a copy of the summons and complaint to him personally; or
(3) leaving a copy of the summons and complaint at his dwelling house or usual place of abode; or
(4) serving his agent as provided by rule, statute or valid agreement.
Trial Rule 4.1(A)(1) " requires that a return receipt must show receipt of the letter in order for service to be effective." Munster v. Groce, 829 N.E.2d 52, 59 (Ind.Ct.App. 2005). Here, the Costas sent a copy of the summons and complaint by certified mail to Theohary at LET's Colorado Springs address. Stephens's trial testimony established that Theohary was an officer of LET, and thus LET arguably could be considered Theohary's " place of business." However, it was Moe who signed the certified mail receipt attached to Theohary's summons, and additional documents mailed to Theohary at LET's address were returned as undeliverable.
Trial Rule 4.16(B) provides,
Anyone accepting service for another person is under a duty to:
(1) promptly deliver the papers to that person;
(2) promptly notify that person that he holds the papers for him; or
(3) within a reasonable time, in writing, notify the clerk or person making the service that he has been unable to make such delivery of notice when such is the case.
" [N]othing in the trial rules requir[es] that the individual to whom service of process is mailed be the one who signs the return receipts in order for service to be effective." Precision Erecting, Inc. v. Wokurka, 638 N.E.2d 472, 474 (Ind.Ct.App. 1994), trans. denied . Our supreme court has stated, however, that " [a]nyone accepting service for another person" means " anyone with authority to accept service for another person." LaPalme v. Romero, 621 N.E.2d 1102, 1106 (Ind. 1993); see also Norris, 957 N.E.2d at 1008 (quoting LaPalme ). Theohary's uncontradicted affidavit states that he did not authorize anyone at LET to accept service for him and that no one at LET forwarded the summons and complaint to him. Based on the foregoing, we must conclude that service by delivery to Moe was ineffective as to Theohary.
Section 1.2 -- Entry of Appearance
The question then becomes whether the trial court acquired personal jurisdiction over Theohary via attorney Zalas entering an appearance on his behalf.
Personal jurisdiction is gained over a person who " is served with summons or enters an appearance, or who is subject[ed] to the power of the court under any other law." Ind. Rules of Procedure, Trial Rule 4(A). Without the requisite notice a summons or an appearance provides, the court lacks jurisdiction to enter and enforce judgments over the person in question.
Idlewine v. Madison Cnty. Bank & Trust Co., 439 N.E.2d 1198, 1200 (Ind.Ct.App. 1982).
" [W]here an attorney appears there is a rebuttable presumption that he has authority to enter an appearance for a party until his authority is challenged and evidence introduced to the contrary." Nwannunu v. Weichman & Assocs., P.C., 770 N.E.2d 871, 878 (Ind.Ct.App. 2002). In his affidavit, Theohary averred that he never authorized Zalas to enter an appearance for him and that Zalas never notified him that he had appeared or answered for him. Zalas's motion to withdraw states that he provided written notification to Theohary of his intent to withdraw, but this is the only evidence that Zalas had any interaction with Theohary, and the record is silent regarding whether Theohary actually received Zalas's notice. The record indicates that Theohary never received notice of the hearing on Zalas's motion to withdraw or a copy of the order granting the motion. The Costas presented no contradictory evidence. They suggest that Theohary waited too long to raise this issue but cite no authority for this proposition. Cf. Stidham v. Whelchel, 698 N.E.2d 1152, 1156 (Ind. 1998) (" It is a bold move, but an option available to a nonresident to ignore a pending proceeding and take the risk that a subsequent challenge to personal jurisdiction will prevail." ). No attorney subsequently appeared for Theohary, and he never appeared on his own behalf.
Because we must resolve any doubt regarding the propriety of the default judgment in favor of Theohary, we conclude that he has sufficiently established that Zalas did not have authority to enter an appearance for him. Therefore, we conclude that the trial court did not acquire personal jurisdiction over Theohary and reverse its denial of his motion for relief from judgment.
Section 1.3 -- Sufficient Minimum Contacts
To determine whether remand for further proceedings is necessary, we must address Theohary's claim that the trial court may not acquire personal jurisdiction over him because he does not have sufficient minimum contacts with Indiana.
The Due Process Clause of the Fourteenth Amendment and article 1, section 12 of the Indiana Constitution require that before a court may exercise personal jurisdiction over a party, that person must have certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. The contacts to be examined must be the purposeful acts of the defendant, not the acts of the plaintiff or any third parties.
Laflamme v. Goodwin, 911 N.E.2d 660, 666 (Ind.Ct.App. 2009) (citations, quotation marks, and brackets omitted).
Theohary's only argument in this regard is that he was neither an employee nor an officer of LET and that the " alleged negligent acts were those of third parties, e.g. LET or any of the other companies that were brought in by amending the complaint." Appellants' Br. at 18. The evidence most favorable to the trial court's rulings establishes that Theohary was an officer and shareholder of LET, that he attended two sales demonstrations of LET's distraction devices in Mishawaka, and that he participated in the discussion of whether to detonate the final R-5 device that injured Brian. Based on the foregoing, we find Theohary's argument unavailing and conclude that he has sufficient minimum contacts with Indiana. Therefore, we remand for further proceedings as to Theohary.
Section 2 -- Sufficiency of Evidence
Stephens purports to challenge the sufficiency of the evidence supporting the trial court's judgment on the Costas' claims, but he devotes most of his argument to claiming that his rights " to defend himself and present evidence" were " improperly curtailed" by the trial court. Appellants' Br. at 24. Stephens failed to make any objections at trial, and therefore he has waived any claims in this regard. See, e.g., Douglas v. Monroe, 743 N.E.2d 1181, 1187 ...