LIBERTY FIRST BANK v. AUTOMOTIVE FINANCE CORPORATION AFC AFC (2021)

Court of Appeals of Indiana.2021-11-17No. Court of Appeals Case No. 21A-CC-1462

Summary · law.co

Holding. The trial court's denial of the garnishee bank's motion to dismiss for lack of personal jurisdiction is affirmed because the bank waived its jurisdictional objection by complying with the garnishment order and responding to interrogatories without objecting to the court's authority.

A Georgia bank received a garnishment order from an Indiana trial court directing it to place a hold on a judgment debtor's deposit accounts and answer interrogatories. The bank complied with the order by filing its responses to the interrogatories and implementing the hold without raising any objection to the court's authority over it. More than two months after complying, the bank filed a motion to dismiss, arguing the Indiana court lacked personal jurisdiction because the bank had no presence or business operations in Indiana. The court rejected this argument, finding that by responding to the interrogatories and complying with the garnishment order without initially objecting to jurisdiction, the bank had voluntarily submitted itself to the court's authority and thereby waived any challenge based on lack of personal jurisdiction.

The appellate court affirmed the trial court's denial of the bank's motion to dismiss. Under Indiana law, a party can waive a jurisdictional defense by responding to or appearing in a proceeding without contesting the court's jurisdiction. Because the bank took affirmative steps to comply with the court's orders—answering interrogatories and placing a hold on accounts—it effectively submitted to the court's jurisdiction, even though it later attempted to challenge that jurisdiction.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a garnishee waives a personal jurisdiction defense by complying with a garnishment order without initially objecting to jurisdiction
Whether an out-of-state bank's minimum contacts with a state are sufficient to establish personal jurisdiction
Timing of jurisdictional challenges and effect of voluntary submission to court authority

Procedural posture

The appellate court reviewed the trial court's denial of the garnishee bank's motion to dismiss for lack of personal jurisdiction filed after the bank had already complied with garnishment proceedings.

Authorities cited

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Opinion · public domain

Case Summary

[1] When a trial court orders a garnishee who has no connection to the State of Indiana to place a hold on an out-of-state bank account and answer interrogatories and the garnishee does so without objecting to personal jurisdiction, the garnishee waives any claim that the trial court lacked personal jurisdiction. We affirm the trial courts denial of Liberty First Banks (“Garnishee”) motion to dismiss for lack of personal jurisdiction.

Facts and Procedural History

[2] In December 2020, Automotive Finance Corporation (AFC) filed a verified motion for proceedings supplemental in Marion Superior Court to collect on a judgment it had obtained against Sheryl Turkia in 2014. On December 29, the trial court ordered Turkia to appear in court via Zoom on February 22, 2021. Also on December 29, the court issued a Notice of Garnishment Proceedings, Summons and Order to Answer Interrogatories, Notice of Hearing and Interrogatories (“Notice and Order”) to Garnishee, a bank in Georgia. Turkia was believed to have deposit accounts with Garnishee. The Notice and Order provided:

[AFC] has an unpaid judgment against [Turkia] on which there is due the principal sum of $79,168.61, post judgment interest of $36,612.77, costs of $315.00, for a total unpaid judgment of $116,096.38. The garnishee, LIBERTY FIRST BANK, is now ordered to answer under oath the interrogatories set forth below or attached in writing within 30 days after service, or, at your option, appear in Court virtually via ZOOM, and answer the interrogatories at the hearing․ Any claim or defense to the proceedings supplemental or garnishment order must be presented at the time of the hearing specified herein. Said garnishee is hereby notified that the hearing on this matter will occur on Feb[ruary] 22, 2021 at 2:30 [p.m.] in the Marion Superior Court, Room No. T-341 virtually via ZOOM.

Appellees App. Vol. II pp. 14-15. The court also ordered Garnishee “to place a 90-day hold on any deposit accounts in which [Turkia] has an interest, either individually or jointly with another person․” Id. at 15. The Notice and Order was served on Garnishee by certified mail.

[3] On January 20, 2021, Garnishee filed its responses to the interrogatories with the trial court without objecting to personal jurisdiction. See id. at 20-23. According to the responses, Turkia had deposit accounts at the bank with balances totaling $239,342.60. Garnishee also placed a hold on Turkias deposit accounts as required by the Notice and Order. See Appellants Br. p. 7.

[4] Garnishee did not appear at the February 22 Zoom hearing to raise any defenses. On March 2, the trial court issued an order finding it had personal jurisdiction over Garnishee “based on the Garnishees filing responses to Interrogatories without objecting to the jurisdiction of the Court.” Appellees App. Vol. II p. 24. The court then ordered Garnishee to pay from Turkias deposit accounts the amount of the judgment against Turkia—now $116,566.54—to AFC. Id. at 25.

[5] Over two months later, on May 13, Garnishee appeared by counsel and filed a motion to dismiss for lack of personal jurisdiction. The trial court denied the motion.

[6] Garnishee now appeals.

Discussion and Decision

[7] Garnishee contends the trial court erred in denying its motion to dismiss for lack of personal jurisdiction because it “owns no property, nor conducts any business within the State of Indiana.” Appellants Br. p. 8.

“Personal jurisdiction refers to a courts power to impose judgment on a particular defendant.” Boyer v. Smith, 42 N.E.3d 505, 509 (Ind. 2015). The Due Process Clause of the Fourteenth Amendment requires that before an Indiana court can properly assert personal jurisdiction over a defendant, the defendant must have “certain minimum contacts with the state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Id. (citing Intl Shoe Co. v. Wash., 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). However, “[a] party can waive lack of personal jurisdiction and submit [itself] to the jurisdiction of the court if [it] responds or appears and does not contest the lack of jurisdiction.” Heartland Res., Inc. v. Bedel, 903 N.E.2d 1004, 1007 (Ind. Ct. App. 2009) (emphases added); see also Stidham v. Whelchel, 698 N.E.2d 1152, 1155 (Ind. 1998) (“A court simply has no power over persons who have no contact with their territory, unless and until there is a response or an appearance and the lack of personal jurisdiction is not protested.”). Although it would be “a bold move,” a defendant can “ignore a pending proceeding and take the risk that a subsequent challenge to personal jurisdiction will prevail.” Parkview Hosp. Inc. v. Am. Family Ins. Co., 151 N.E.3d 1218, 1225 (Ind. Ct. App. 2020) (quotation omitted), trans. denied.

[8] Here, Garnishee did not ignore the garnishment proceeding. Rather, it complied with the Notice and Order by filing its responses to the interrogatories with the trial court without challenging personal jurisdiction and placing a hold on Turkias deposit accounts. By taking these actions, Garnishee waived its claim that the trial court lacked personal jurisdiction. See Allstate Ins. Co. v. Morrison, 146 Ind. App. 497, 256 N.E.2d 918, 922 (1970) (holding the garnishee waived its challenge to personal jurisdiction because it “chose to submit its person to the jurisdiction of the trial court by (1) answering interrogatories and (2) filing a motion for new trial, attacking only the merits of the decision”), rehg denied; In re Paternity of T.M.Y., 725 N.E.2d 997, 1003 (Ind. Ct. App. 2000) (holding a nonresident challenging a paternity judgment was “estopped from asserting lack of personal jurisdiction as he voluntarily submitted to the courts jurisdiction by paying on the child support order for over two years”), rehg denied, trans. denied. We therefore affirm the trial courts denial of Garnishees motion to dismiss for lack of personal jurisdiction.

[9] Affirmed.

FOOTNOTES

. Garnishees motion indicated it was being filed under Indiana Trial Rule 12(B)(2). AFC notes that because judgment had already been entered, Garnishee should have filed a motion for relief from judgment under Trial Rule 60(B)(6). See Appellees Br. p. 14. Under either rule, we would reach the same result.

Vaidik, Judge.

May, J., and Molter, J., concur.