Beverly K. Oswald v. Tarek Shehadeh and Falon Vela

FILED
Aug 06 2018, 10:17 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE:
Charles E. Oswald TAREK SHEHADEH
Harrison & Moberly, LLP Christopher J. Evans
Indianapolis, Indiana Shana D. Tesnar
Adler Tesnar & Whalin
Noblesville, Indiana

IN THE
COURT OF APPEALS OF INDIANA

Beverly K. Oswald, August 6, 2018
Appellant-Plaintiff, Court of Appeals Case No.
29A02-1711-PL-2627
v. Appeal from the Hamilton
Superior Court
Tarek Shehadeh and The Honorable Steven R. Nation,
Falon Vela, Judge
Appellees-Defendants The Honorable David K. Najjar,
Magistrate
Trial Court Cause No.
29D01-1701-PL-211

Vaidik, Chief Judge.

Case Summary
[1] Beverly Oswald, an Indiana resident, sued Tarek Shehadeh and Falon Vela,

Arkansas residents, in Indiana for breach of contract. Shehadeh and Vela

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 moved to have the suit dismissed for lack of personal jurisdiction. The trial

court agreed that Indiana lacked personal jurisdiction over the defendants and

dismissed the suit.1

[2] On appeal, Oswald contends that Shehadeh and Vela had sufficient minimum

contacts in Indiana to give Indiana specific personal jurisdiction over the

defendants and that exercise of personal jurisdiction over the defendants is

reasonable. Shehadeh argues that personal jurisdiction does not exist in

Indiana, and, even if he and Vela are subject to personal jurisdiction in Indiana,

the contract at issue contains a forum-selection clause requiring Oswald’s claim

to be heard in Arkansas.2 We agree with Oswald that Indiana can exercise

personal jurisdiction over Shehadeh and Vela and that it is reasonable for

Shehadeh and Vela to defend this matter in Indiana. Furthermore, the

language of the contract is not a forum-selection clause but rather a choice-of-

law provision requiring the trial court to apply Arkansas law. We reverse the

trial court’s order and remand for further proceedings.

1
The trial court’s order provides that the matter was dismissed under Indiana Trial Rule 12(B)(1)—lack of
subject-matter jurisdiction. Appellant’s App. Vol. II p. 6. However, on appeal, both Oswald and Shehadeh
state that the case was dismissed for lack of personal jurisdiction. Appellant’s Br. p. 11; Appellee’s Br. p. 9
n.1 (“Appellee is compelled to conclude that lack of subject matter jurisdiction was likely not the substantive
basis for the trial court’s dismissal of Appellant’s case below.”). Based on our review of the record, we agree
with the parties that the trial court’s order contains a typographical error and that the court intended to
dismiss this case under Indiana Trial Rule 12(B)(2)—lack of personal jurisdiction.
2
Vela was unrepresented during the trial-court proceedings and did not file a brief on appeal. In cases where
an appellee fails to submit a brief, we will not undertake the burden of developing arguments on her behalf.
Orlich v. Orlich, 859 N.E.2d 671, 673 (Ind. Ct. App. 2006). Instead, we “apply a less stringent standard of
review” and will reverse upon a showing of prima facie error, which is error “at first sight, on first
appearance, or on the face of it.” Id.

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 Facts and Procedural History
[3] Oswald is the sole owner of Eville Louie, LLC, which owns and operates Bar

Louie restaurants and is headquartered in Indiana. In January 2010, Eville

Louie owned and operated two Bar Louie Restaurants in the Little Rock,

Arkansas area—Little Rock Louie, LLC, and North Rock Louie, LLC. One

month later, Oswald interviewed candidates for the general-manager position of

the Little Rock Louie restaurant. The interviews took place in Indiana, and

Shehadeh was one of the applicants interviewed. During his interview, he

expressed an interest in buying an ownership stake in Little Rock Louie and

North Rock Louie. At the time, Oswald declined his offer but hired Shehadeh

as the Little Rock Louie general manager. Shehadeh returned to Indiana in

April 2010 to participate in a mandatory two-week Bar Louie training program.

As part of his duties as general manager, Shehadeh repeatedly contacted

Oswald and other Indiana residents, and he traveled to Indiana to attend Bar

Louie management meetings.

[4] In 2015, Shehadeh and Vela contacted Oswald in Indiana and expressed their

interest in buying Little Rock Louie and North Rock Louie. Oswald agreed to

sell the Arkansas restaurants to the pair. The sales contract was signed and

executed in September 2015. As part of the terms of the sale, Shehadeh and

Vela “assume[d] and agree[d] to pay all lender obligations relative to both

businesses.” Appellant’s App. Vol. II p. 13. These obligations included twelve

promissory notes—eight of which were held by Indiana residents or Indiana

corporations. Shehadeh and Vela also agreed to pay Oswald annual

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 installments for the cost of the restaurants. At all relevant times, Oswald lived

in Indiana.

[5] After Shehadeh and Vela began operating the Arkansas restaurants, they

continued to use an Indiana payroll company, an Indiana insurance agent, and

Indiana accountants. Shehadeh also “received corporate mail in Indiana” and

continued to receive mail there as of October 2017. Id. at 51.

[6] In January 2017, Oswald sued Shehadeh and Vela in Hamilton County,

Indiana, for breach of contract. Shehadeh and Vela separately moved for the

case to be dismissed for lack of personal jurisdiction. Oswald responded and

filed an affidavit in support of her position. Shehadeh replied and filed his own

affidavit in support of his motion. After the hearing on the motions, the trial

court concluded that Indiana lacked personal jurisdiction over Shehadeh and

Vela and dismissed the case.

[7] Oswald now appeals.

Discussion and Decision
[8] Oswald contends that the trial court erred when it granted the motions to

dismiss because (1) there are sufficient minimum contacts to establish personal

jurisdiction over Shehadeh and Vela and (2) Shehadeh and Vela have failed to

prove that exercise of personal jurisdiction over them is unreasonable.

[9] Before we address Oswald’s personal-jurisdiction argument, we first discuss

Shehadeh’s argument that paragraph 5.2 of the contract is a forum-selection
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clause that requires Oswald to bring her claim in Arkansas. We disagree.

Paragraph 5.2 reads, “This agreement shall be interpreted and enforced in

accordance with the laws of the State of Arkansas.” Appellant’s App. Vol. II p.

13. We have long held that language requiring only that an agreement shall be

interpreted and enforced under the laws of a specific state is a choice-of-law

provision and not a forum-selection clause. See Dexter Axle Co. v. Baan USA,

Inc., 833 N.E.2d 43, 46 (Ind. Ct. App. 2005) (concluding that the software

agreement contained only a choice-of-law provision because it required that the

agreement “be interpreted and construed in accordance with the laws of

Virginia”); Albright v. Edward D. Jones & Co., 571 N.E.2d 1329, 1332 (Ind. Ct.

App. 1991) (concluding that the clause, “This agreement and its enforcement

shall be governed by the law of the State of Missouri,” was a choice-of-law

provision), trans. denied. To be a forum-selection clause, the provision must

include language indicating that the parties have consented to have a particular

jurisdiction hear a legal dispute arising under the contract. See Dexter Axle Co.,

833 N.E.2d at 47 (finding that the consulting agreement contained both choice-

of-law and forum-selection clauses because the agreement stated, “This

Agreement will be construed and controlled by the laws of the State of

California, U.S.A. . . . and the parties mutually consent to exclusive

jurisdiction and venue in the state and federal courts sitting in Santa Clara

County, California.” (emphasis added)); Bowlers Country Club v. Royal Links

USA, Inc., 846 N.E.2d 732, 734 n.2 (Ind. Ct. App. 2006) (“The RLU forum

selection clause provides: ‘Any action related to this Agreement may be brought

only in the courts of Lucas County, Ohio, or, if it has or can acquire
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 jurisdiction, in the United States District Court for the Northern District of

Ohio, Western Division. Each party consents to the exclusive jurisdiction of

such courts[.]’” (emphasis added)), trans. denied. Paragraph 5.2 does not state

that Oswald, Shehadeh, and Vela consent to the exclusive jurisdiction of

Arkansas or any similar language. Rather, the paragraph only requires that

Arkansas law be applied by whatever court hears a dispute arising under the

contract. This is a choice-of-law provision, not a forum-selection clause.3

[10] We turn now to Oswald’s personal-jurisdiction argument. Personal jurisdiction

is a question of law, which we review de novo. LinkAmerica Corp. v. Cox, 857

N.E.2d 961, 965 (Ind. 2006). We do not defer to the trial court’s legal

conclusion on whether personal jurisdiction exists. Id. Personal jurisdiction

turns on the facts, “namely the extent of a defendant’s contacts with the forum,

and ordinarily a trial court’s factual findings on that point would be reviewed

for clear error.” Wolf’s Marine, Inc. v. Brar, 3 N.E.3d 12, 15 (Ind. Ct. App.

2014). However, the trial court did not issue any findings of fact and made its

ruling based on the paper records submitted by the parties and the arguments of

counsel. “In such a case, we are in as good a position as the trial court to

3
Even if this case were litigated in Arkansas, we are convinced that the Arkansas court would reach the same
conclusion that this language is a choice-of-law provision. See Goodwin v. Magness Oil Co., CV-17-249, 2018
WL 2245652, --- S.W.3d --- (Ark. Ct. App. May 16, 2018) (concluding that the contract included both a
choice-of-law provision and a forum-selection clause: “This Agreement shall be governed by and construed in
accordance with the laws of the State of Arkansas. Any action shall be adjudicated in the Circuit Court of
Baxter County, Arkansas.”).

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 determine the existence of jurisdictional facts and will employ de novo review

as to those facts.”4 Id. (quotations omitted).

[11] Indiana Trial Rule 4.4(A)—Indiana’s “long-arm” rule for exercising personal

jurisdiction over out-of-state defendants—permits exercising personal

jurisdiction in any manner that is consistent with the Due Process Clause of the

Fourteenth Amendment to the United States Constitution. LinkAmerica, 857

N.E.2d at 965. The Due Process Clause “requires that before a state may

exercise 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. at 967

(quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Indiana trial

courts are courts of general jurisdiction, and jurisdiction is presumed. Keesling

v. Winstead, 858 N.E.2d 996, 1000 (Ind. Ct. App. 2006). “Therefore, the

plaintiff need not allege jurisdiction in its complaint.” Id. (citations omitted).

Once personal jurisdiction is challenged, usually by the defendant, “the plaintiff

4
During the hearing, the trial court did not allow the parties to present any evidence because it believed that
doing so would convert the motions to dismiss into motions for summary judgment. Furthermore, the court
indicated in its order that it did not consider the affidavits of the parties and only considered “the pleadings of
the parties, the argument of counsel at the hearing, and the applicable law” in reaching its decision.
Appellant’s App. Vol. II p. 6. On appeal, Shehadeh and Oswald disagree as to whether the trial court should
have considered the affidavits they filed in support of and in opposition to the motions to dismiss. A motion
to dismiss for lack of personal jurisdiction is not treated as a motion for summary judgment because materials
outside of the pleadings are filed. Mid-States Aircraft Engines, Inc. v. Mize Co., Inc., 467 N.E.2d 1242, 1247 (Ind.
Ct. App. 1984). This conversion-to-summary-judgment rule only applies to a motion to dismiss for failure to
state a claim under Indiana Trial Rule 12(B)(6). See Ind. Trial Rule 12(B). In fact, when a defendant
challenges personal jurisdiction, the plaintiff is not only permitted but required to present evidence to support
her claim that personal jurisdiction over the defendant exists. Keesling v. Winstead, 858 N.E.2d 996, 1000
(Ind. Ct. App. 2006). Therefore, we have considered the parties’ affidavits in our de novo review.

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 must present evidence to show that there is personal jurisdiction over the

defendant.” Id. Once the plaintiff satisfies her burden, the defendant must then

present “a compelling case that the presence of some other considerations

would render jurisdiction unreasonable.” Burger King Corp. v. Rudzewicz, 471

U.S. 462, 477 (1985).

[12] Personal jurisdiction may be established in one of two ways. First, if the

defendant’s contacts with the forum state were so “continuous and systematic”

that the defendant “should reasonably anticipate being haled into the courts of

that state for any matter, then the defendant is subject to general jurisdiction[.]”

LinkAmerica, 857 N.E.2d at 967. Even if the defendant’s contacts are not

“continuous and systematic,” personal jurisdiction may be exercised “if the

controversary is related to or arises out of the defendant’s contacts with the

forum state.” Id. This is specific jurisdiction, and it requires that the

“defendant purposefully availed itself of the privilege of conducting activities

within the forum state so that the defendant reasonably anticipates being haled

into court there.” Id.

[13] Oswald contends that specific jurisdiction exists because: Shehadeh and Vela

solicited Oswald in Indiana for the sale of her Arkansas restaurants; Shehadeh

and Vela signed the sales contract and sent it to Indiana for Oswald to sign; the

payment for the restaurants was sent to Indiana; Shehadeh and Vela assumed

many of Oswald’s debts with Indiana vendors; after taking over operational

control of the restaurants, Shehadeh and Vela continued to use Indiana vendors

for the company payroll, insurance, and accounting; and Shehadeh maintained

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 a corporate mailbox in Indiana for the restaurants. Shehadeh does not rebut

any of Oswald’s claims; rather, he contends that “enter[ing] into a contract with

an Indiana resident, is, without more, insufficient to subject him to suit in

Indiana.” Appellee’s Br. p. 16. Shehadeh is correct; a contract, by itself, is

insufficient to subject him to suit in Indiana. See Burger King, 471 U.S. at 478

(“If the question is whether an individual’s contract with an out-of-state party

alone can automatically establish sufficient minimum contacts in the other

party’s home forum, we believe the answer clearly is that it cannot.”). But, as

Oswald points out, there was more than just a contract in this matter; there

were multiple contacts with Indiana, some of which are still ongoing.

[14] Nevertheless, Shehadeh relies on our decision in Wolf’s Marine to support his

contention that Indiana does not have personal jurisdiction. In Wolf’s Marine,

an Indiana resident sued a Michigan company in Indiana for breach of contract

and claimed specific personal jurisdiction. The Indiana resident made the

initial contact with the company in Michigan, the contract was for a limited

duration and scope, the contract was fully executed in Michigan, and no goods

were delivered to or from Indiana. We concluded that the Michigan company

did not have sufficient minimum contacts with Indiana to permit the state to

exercise specific jurisdiction over it. We find that Shehadeh’s reliance on this

case is misplaced. Unlike Wolf’s Marine, Shehadeh solicited Oswald in Indiana

to sell her restaurants. The contract was a multi-year agreement requiring

Shehadeh and Vela to make annual payments to Oswald in Indiana. And, as

already discussed, after the contract was executed Shehadeh and Vela

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 maintained multiple business relationships with Indiana companies and

residents and maintained a mailbox in Indiana for the restaurants. We

conclude that Oswald has met her burden of proving that Shehadeh and Vela

have sufficient minimum contacts related to the contract in Indiana for there to

be specific personal jurisdiction here.5

[15] Our inquiry does not stop here, however. We must also ensure that it is

reasonable for Shehadeh and Vela to litigate this matter in Indiana. “[I]f the

defendant has contacts with the forum state sufficient for general or specific

jurisdiction, due process requires that the assertion of personal jurisdiction over

the defendant is reasonable.” LinkAmerica, 857 N.E.2d at 967. Reasonableness

is determined by balancing five factors:

(1) the burden on the defendant; (2) the forum State’s interest in
adjudicating the dispute; (3) the plaintiff’s interest in obtaining
convenien[t] and effective relief; (4) the interstate judicial
system’s interest in obtaining the most efficient resolution of
controversies; and (5) the shared interest of the several States in
furthering fundamental substantive social policies.

Id. at 967-68 (citing Burger King, 471 U.S. at 476-77). The burden is on the

defendant to present “a compelling case that the presence of some other

5
Because we conclude that there is specific personal jurisdiction in this case, we do not address the parties’
arguments regarding general personal jurisdiction.

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 considerations would render jurisdiction unreasonable.” Burger King, 471 U.S.

at 477.

[16] Shehadeh claims that it is unduly burdensome on him to travel to Indiana to

litigate this matter because he is a resident of Arkansas, bought businesses

located in Arkansas, and “signed a contract which he might have reasonably

believed would not only be governed by Arkansas law but also enforced in the

state of Arkansas, should that become necessary.” Appellee’s Br. p. 19

(emphasis added). He also points out that the contract discloses the

involvement of Arkansas lenders. Shehadeh, however, does not state that any

evidence or witnesses in support of his defense would become unavailable if the

case were litigated in Indiana. He has failed to show how proceeding in

Indiana will burden him.

[17] As for factor two, Shehadeh states, “Arkansas clearly has a more substantial

interest than Indiana in adjudicating this dispute.” Id. He then lays out all of

the reasons why Arkansas is interested in adjudicating this dispute. But the

question isn’t whether another state has an interest in adjudicating the dispute;

it is whether Indiana, as the forum state, has an interest in adjudicating the

dispute. Shehadeh has failed to meet his burden on the second factor.

[18] Shehadeh concedes “that it is likely convenient for Oswald to litigate the merits

of this case in an Indiana forum.” Id. at 20. He then argues that this

convenience does not outweigh the “disadvantages occasioned upon [him] in

having to litigate this dispute in a foreign forum[.]” Id. Shehadeh’s argument is

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 unrelated to the factor being weighed. He has conceded factor three in favor of

Oswald.

[19] Regarding the fourth factor—the interstate judicial system’s interest in

obtaining the most efficient resolution of controversies—Shehadeh correctly

points out that if Oswald succeeds on the merits of her claim, she will have to

have the judgment enforced in Arkansas. Shehadeh, however, does not point

to any case law that says Arkansas will not enforce an out-of-state judgment.

To the contrary, “The State of Arkansas must give full faith and credit to

foreign judgments under the U.S. Constitution.” Amant v. Callahan, 20 S.W.3d

896, 898 (Ark. 2000) (citing U.S. Const. art. 4, § 1; Ark. Code Ann. § 16-66-

602; First Commercial Trust Co. v. Rank, 915 S.W.2d 262 (Ark. 1996)). Shehadeh

also contends that Arkansas should hear the case because paragraph 5.2 of the

contract requires the court to apply Arkansas law. But he offers no argument as

to why Indiana courts are incapable of correctly interpreting and applying

Arkansas law. Our trial courts have historically adjudicated matters requiring

them to interpret and apply a foreign jurisdiction’s law. See Berberena v. State, 86

N.E.3d 199 (Ind. Ct. App. 2017) (comparing Illinois and Indiana statutes to

determine if defendant was a serious violent felon); Hollingsworth v. State, 907

N.E.2d 1026 (Ind. Ct. App. 2009) (comparing Arkansas and Indiana statutes to

determine if defendant was a serious violent felon); Mann v. State, 754 N.E.2d

544 (Ind. Ct. App. 2001) (comparing Ohio and Indiana statutes for enhanced

felony conviction).

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[20] As to the fifth and final factor, Shehadeh states that the connection to this

matter is “real and tangible for the state of Arkansas in a way that is not for

Indiana, and the truth of this proposition seems rather obvious.” Appellee’s Br.

p. 20. He does not elaborate on this statement nor does he make an argument

for why litigating this matter in Arkansas would further fundamental and

substantive social policies. Again, his argument is unrelated to the factor being

weighed.

[21] Balancing all five factors, we conclude that Shehadeh has failed to meet his

burden to present a compelling case for why litigating this dispute in Indiana is

unreasonable. In sum, Shehadeh and Vela have sufficient minimum contacts

with Indiana for the court to exercise personal jurisdiction over them, and their

due-process rights will not be violated by requiring them to litigate this matter

in Indiana.

[22] Reversed and remanded.

Pyle, J., and Barnes, Sr. J., concur.

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