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Arnold v. Long

Court of Appeals of Indiana

September 16, 2016

Jerry Arnold d/b/a Arnold's Jewelry and Gifts, Inc., Appellant-Plaintiff,
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. a/k/a Hatchett DeWalt & Hatchett, P.C., Appellees-Defendants.

         Appeal from the Cass Circuit Court The Honorable Leo T. Burns, Judge Cause No. 09C01-1501-PL-4

          Attorney for Appellant Matthew D. Barrett Logansport, Indiana.

          Attorneys for Appellee Patrick E. Chavis, III Indianapolis, Indiana

          Riley, Judge.


         [¶1] Appellant-Plaintiff, Jerry Arnold d/b/a Arnold's Jewelry and Gifts, Inc. (Arnold), appeals the grant of a motion to dismiss made by Appellees-Defendants, Marcellus Long Jr.; Marcellus Long Jr. P.C. a/k/a law office of Marcellus Long PLLC (Long); and Hatchett DeWalt & Hatchett PLLC (Hatchett DeWalt) (collectively, Appellees).

         [¶2] We affirm.


         [¶3] Arnold raises three issues on appeal, one of which we find dispositive and restate as: Whether the trial court properly dismissed Arnold's Complaint for lack of personal jurisdiction.


         [¶4] Arnold is engaged in the business of selling jewelry and specialty gifts in Logansport, Indiana. Long is a licensed attorney in the State of Michigan, and his law office is located at 485 Orchard Lake Road, Pontiac, Michigan. Hatchett DeWalt is a Michigan law firm engaged in the practice of law with an office located at 485 Orchard Lake Road, Pontiac, Michigan. "Long was an employee, agent, member, and/or servant acting within the scope of his employment, partnership, joint venture, and/or association with [] Hatchett DeWalt with respect to the subject matter" of Arnold's Complaint. (Appellant's App. p. 11).

         [¶5] Michigan Commercial Resource Locator, Inc. (Michigan Commercial) is a Michigan corporation with an office in Detroit, Michigan, and is engaged in the business of facilitating commercial mortgage loans and other commercial real estate debt. When Arnold wanted to expand his business, a mortgage broker referred him to Sabastian Restum a/k/a Sam Ajami (Restum)-an agent of Michigan Commercial. Through Restum, Michigan Commercial agreed to obtain lenders to loan Arnold $850, 000.00 through a secured line of credit. In accordance with that arrangement, Michigan Commercial lawyer's, the Appellees, actively negotiated and drafted several loan documents which included a Term Sheet Agreement, Facilitation Agreement, and Non-Compete Agreement. Pursuant to the Facilitation Agreement, Arnold agreed to pay Michigan Commercial a loan processing fee of $20, 700 upon signing the loan documents. Clause 3D of the Facilitation Agreement stated that the fee was "to be used for all costs associated with obtaining the loan including but not limited to appraisal cost, survey costs, environmental costs, and title insurance fees." (Appellant's App. p. 29). That clause further stated that if Michigan Commercial "does not close the loan for any reason, all fees will be refunded." (Appellant's App. p. 29).

         [¶6] On September 23, 2013, Jim Jarvis (Jarvis), Michigan Commercial's agent, travelled from Michigan to Arnold's jewelry shop in Indiana to obtain Arnold's signature on the loan agreements. Two days after he signed the loan documents, on September 25, 2013, Arnold sent a cashier's check for $20, 700 to the Appellees, and it was subsequently deposited by the Appellees into an Interest on Lawyer Trust Account (IOLTA) at a PNC Bank in Pontiac, Michigan. Sometime thereafter, Restum communicated to Arnold that Michigan Commercial had successively found possible lenders and the loan was bound to close on April 25, 2014.

         [¶7] On May 13, 2014, the Appellees wrote a letter to Arnold indicating that they had received instructions from Michigan Commercial to convey to him that the

closing documents should be completed either Friday, May 16th or Monday, May 19th [, 2014] . . . My client apologizes for the lengthy time for this loan. The negotiations among the lending group regarding the loan structure have caused delays in the transaction, coupled with the fact that they are working at their own pace to maintain a certain level of comfort.

(Appellant's App. p. 39). Sometime after the Appellees' letter, a Federal Bureau of Investigation (FBI) agent contacted Arnold and advised him that he had been a victim of fraud by Appellees. The FBI agent advised Arnold that Restum and several others had been taken into custody for federal criminal charges involving mail and wire fraud and conspiracy to commit wire fraud. On May 28, 2014, Restum was charged with wire fraud in violation of 18 U.S.C. §§ 1343 and 1349. The complaint focused on an illegal advance fee scheme operated by Restum and several others. Specifically, the complaint alleged that in executing the scheme to defraud, Restum and several others represented that Michigan Commercial acted as a "facilitator" in procuring large commercial loans from non-conventional lenders having an 80% success rate in closing such loans. Once a party agreed to apply for a commercial loan, they were required to pay a loan processing fee to Michigan Commercial before being funded. Arnold was informed that he had to pay $50, 000 as an upfront fee, but when he indicated that he could not afford that, the fee was reduced by half. Thereafter, on September 25, 2013, Arnold purchased a cashier's check and addressed it to Long's firm. On April 9, 2014, Restum represented to Arnold that the loan would close on April 25, 2014.

         [¶8] Based on the fact that the loan had not closed on its proposed date, on June 30, 2014, Arnold, through his lawyer, sent a demand letter to the Appellees demanding a refund of the entire $20, 700.00. The letter stated, in part:

The loan was supposed to close on April 25, 2014. To date, that has not happened. Meanwhile a federal criminal case was filed in the U.S. District Court for the Eastern District of Michigan, [] against [] Restum a/k/a Sam Ajami alleging a fraud scheme involving [Michigan Commercial] . . . []Arnold and his business are mentioned as one of several victims in the criminal complaint and your law firm is also stated as being involved in these transactions.
[] Arnold has made repeated requests for the return of his $20, 700.00, but he has not been refunded a dime. . . . The $20, 700.00 fee was unearned and should have been returned back to [] Arnold at his request since your client did not fulfill ...

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