Indiana

Indiana trial courts can assert personal jurisdiction over out-of-state companies for the purposes of enforcing an Indiana Attorney General's petition to enforce a civil investigative demand, ruled the Indiana Court of Appeals today.

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In Everdry Marketing and Management, Inc. v. Steve Carter, Attorney General of Indiana, No. 49A02-0706-CV-452, Everdry, an Ohio corporation that provides waterproofing services for homes, had franchises operating in Fort Wayne and Indianapolis. It had not filed a Uniform Franchise Registration Application with Indiana before franchising the company. After receiving complaints about the Indiana franchises failing to honor "lifetime warranties" on Everdry's waterproofing systems, the Attorney General's office found Everdry's Web site contained a very similar warranty statement as the one that appeared in the customer's contracts. Pursuant to Indiana Code Section 4-6-3-3, the Attorney General's office issued a CID upon Everdry at its Ohio office. CIDs are a pre-litigation tool to determine whether an Indiana law has been violated and address whether a subject has certain information relevant to the investigation.

This particular case turns on whether Everdry consented to Indiana jurisdiction because of its franchising activities in Indiana. The Court of Appeals held that it had consented to jurisdiction.

However, the Court of Appeals did not stop there. The Court of Appeals proceeded to analyze Everdry's contacts with Indiana pursuant to Indiana Trial Rule 4.4(A) and constitutional due process (for the lawyers in the crowd: International Shoe does get a mention).

Out of state franchisors need to pay attention to this case. I expect a petition to transfer to the Indiana Supreme Court and we will need to see if that court accept transfer.

My original post on this subject will be up tomorrow.