Shotwell v. Cliff Hagan Ribeye Franchise, Inc.

572 N.E.2d 487, 1991 Ind. LEXIS 97, 1991 WL 90782
CourtIndiana Supreme Court
DecidedMay 29, 1991
Docket10S04-9105-CV-416
StatusPublished
Cited by30 cases

This text of 572 N.E.2d 487 (Shotwell v. Cliff Hagan Ribeye Franchise, Inc.) is published on Counsel Stack Legal Research, covering Indiana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shotwell v. Cliff Hagan Ribeye Franchise, Inc., 572 N.E.2d 487, 1991 Ind. LEXIS 97, 1991 WL 90782 (Ind. 1991).

Opinion

ON PETITION TO TRANSFER

KRAHULIK, Justice.

Cliff Hagan's Ribeye Franchise, Inc., and Cliff Hagan Ribeye, Inc., ('Hagan defendants") seek transfer after the Court of Appeals reversed the trial court and ordered reinstatement of a default judgment which the trial court had set aside. Shot well v. Cliff Hagan's Ribeye Franchise (1990), Ind.App., 553 N.E.2d 204. Because we conclude that service of process on the Hagan defendants did not comply with Inp. Cope § 23-8-8-1 (1982), we now grant transfer, vacate the opinion of the Court of Appeals, and affirm the trial court's setting aside of the default judgment. The following issues are raised:

1. Whether the trial court erred in granting the Hagan defendants' Motion for Relief from Judgement under Inp. Triat Rune 60(B);

2. Whether the Hagan defendants were "doing business" in Indiana for purposes of the long arm statute; and

3. Whether the Hagan defendants were required to present a meritorious defense in order to have the default set aside.

The facts necessary for resolution of these issues follow. In 1986, plaintiffs Dan F. Shotwell and Cliff Hagan Ribeye of Clarksville, Inc. d/b/a Cliff Hagan Ribeye (collectively, Shotwell) filed suit against the Hagan defendants, both of which were located in Kentucky, for a declaratory judgment to void a franchise agreement, for damages, attorney fees, and costs. The Hagan defendants were foreign corporations neither licensed nor admitted to do business in Indiana. Service of process was attempted pursuant to Inp.Cop® § 23-3-3-1, which provides a method for achieving service on corporations not licensed or admitted to do business in Indiana. In pertinent part the statute provides:

Provided, that notice of such service and a copy of the process, writ, notice or order are forthwith sent by registered mail, with return receipt requested, addressed to such foreign corporation at the principal office of such foreign corporation designated in the articles of incorporation of such foreign corporation as the same may appear in the proper office of the state under whose laws such corporation is incorporated where articles of incorporation are required originally to be filed under the laws of such state. Upon the return of such return receipt showing delivery and acceptance of such registered mail, or upon the return of such registered mail showing a refusal of the acceptance thereof by such foreign corporation, the secretary of state shall attach either the return receipt or such refused mail to the copy of the process, writ, notice, or order retained by him and mail the same to the clerk of the court....

Ind.Code § 28-8-38-1 1 (Emphasis added) Accordingly, the summons and complaint were served on the Indiana secretary of state and were in turn forwarded via registered mail to the Hagan defendants' respective agents for service of process as identified in the Hagan defendants' annual reports filed with the Kentucky Secretary of State. These papers were returned to the Indiana Secretary of State marked "Return to Sender Forward Order Expired" and "Moved Not Forwardable" by the U.S. Post Office. The Indiana Secretary of State filed affidavits of service reflecting each notation as required by Inp.CopE § 28-8-3-1.

Both Hagan defendants were listed in the Lexington telephone directory in 1986, and for some period of time before suit was filed, Shotwell had been sending checks to one or the other defendant. Furthermore, the envelope containing the summons directed to Cliff Hagan Ribeye Franchise, Inc., contained a street number that differed from the one shown in the records of *489 the Kentucky Secretary of State's office. We also note that in 1981, Cliff Hagan Ribeye, Inc., attempted to change its corporate address on forms sent to the Kentucky Secretary of State's office but that a period of two years elapsed before the change appeared on the annual report form, and that the franchise attempted a similar change beginning in 1985 which was not reflected on the form until 1988. In addition, the annual report forms for 1985 through 1988 did not provide a space for indicating a change in the address of the registered agent.

Neither Hagan defendant filed an answer to the complaint; indeed, the parties agree that neither Hagan defendant ever received process and neither had actual knowledge of the existence of the lawsuit. A default judgment for $194,000 in damages and $787.50 in attorney fees, interest and costs was entered six weeks after the complaint was filed.

No attempt was made to execute on the judgment for twenty-two months. When the Hagan defendants were served in the action to collect the judgment, they promptly filed a motion for relief from judgment pursuant to TR. 60. The trial court granted the motion and set aside the judgment pursuant to TR. 60(B)(8).

I. Granting of Motion for Relief from Judgment

At the outset, we note that the decision of whether to grant relief under TR. 60(B) is left to the equitable discretion of the trial court. We will not reweigh the evidence, and will reverse only for an abuse of such discretion. Hoag v. Jeffers (1928) 201 Ind. 249, 159 N.E. 753.

The statute pursuant to which service was attempted provides that a foreign corporation not authorized or licensed to do business in Indiana is deemed to have appointed the secretary of state as its agent for service of process and sets forth the method by which service is to be accomplished. One of the steps in the process required by the express terms of the statute is that the return receipt show "delivery and acceptance" or "refusal of acceptance" of the suit papers by the defendant. Here, the return receipts reveal that there was neither acceptance nor rejection of the suit papers. Therefore, by the express terms of the statute, service was not accomplished.

The rule is well-established that to exercise jurisdiction over a non-resident defendant, due process considerations require that a defendant must be given adequate notice of pending litigation. Mullane v. Central Hanover Bank & Trust Co. (1950), 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865. We do not answer the question of whether Inp.CopE § 23-8-8-1 would comply with the notice requirement if the statute were interpreted to mean, as was suggested by Shotwell and by the Court of Appeals, that neither acceptance nor rejection of the registered mail was required. Clearly, the statute as worded meets constitutional requirements.

Shotwell would have us decide that the Hagan defendants have effectively rejected service by failing to keep their records updated with the secretary of state's office in Kentucky where the Hagan defendants were domiciled. We do not agree. What ever are the laws in Kentucky pertaining to a corporation's obligation to supply the Kentucky secretary of state's office with current addresses, they are laws for those in the State of Kentucky to enforce, not the plaintiffs here.

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Bluebook (online)
572 N.E.2d 487, 1991 Ind. LEXIS 97, 1991 WL 90782, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shotwell-v-cliff-hagan-ribeye-franchise-inc-ind-1991.