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Hall's Specialties Inc. v. Schupbach

March 29, 1985


Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. William C. Lee, District Judge.

Flaum, Circuit Judge, Pell, Senior Circuit Judge, and Evans, District Judge*fn* .

Author: Evans

EVANS, District Judge.

We consider the appeal of Hall's Specialties, Inc. (Hall) from a decision of the district court, dismissing this case for lack of personal jurisdiction over Fred Schupbach Jr. d/b/a Schupbach Trucks.

Hall filed a complaint in the District Court for the Northern District of Indiana, Fort Wayne Division, on April 3, 1981, naming Schupbach and Eureka Welding Company (EWCO) as defendants. Federal jurisdiction was based on diversity of citizenship. EWCO failed to answer the complaint, and on January 29, 1983, a default judgment was entered against it. Meanwhile, Schupbach filed a motion for dismissal of the action, claiming, among other things, that the court did not have personal jurisdiction over him. On November 10, 1981, his motion was denied.*fn1 In March of 1983, a jury trial was conducted on Hall's claims. It ended when a verdict was returned in favor of Hall in the amount of $23,440.00. Schupbach filed a post-trial motions, including a renewed motion to dismiss for lack of personal jurisdiction. On January 26, 1984, the motion was granted, the verdict was set aside, and the case dismissed.

Schupbach raises a threshold question regarding our jurisdiction to entertain this appeal. We are satisfied, however, that jurisdiction is present, and thus we go directly to the merits, the propriety of granting Schupbach's jurisdictional motion to dismiss.

Hall is an Indiana corporation with its principal office in De Kalb County, Indiana. Schupbach is the sole proprietor of Schupbach Trucks of Bradford, Illinois. As a sideline, Schupbach sells tanker transports. The other defendant, no longer involved in this case, is EWCO, Inc., of Eureka, Illinois, a business which tests and repairs tanker transports.

Advertisements depicting a tanker which Schupbach had for sale appeared in the "Indiana Prairie Farmer" magazine. After seeing the ad, Hall contacted Schupbach about the tanker. Schupbach sent Hall pictures and literature relating to the tanker. On December 8, 1979, Hall went to Illinois, purchased the tanker, and transported it back to Indiana. After using the tanker a few times, Hall discovered a crack which made it unfit for the use which it was purchased--that is, to transport anhydrous ammonia. After the crack was discovered, Schupbach and Hall conducted discussions relating to the condition of the tanker. They decided that it should be transported to EWCO for repairs. While the tanker was in the possession of EWCO in Illinois, it was totally destroyed during a test.

This case joins a long list of cases that have presented personal jurisdiction, minimum contacts, and due process issues regarding the permissible constitutional reach of state long-arm statutes. When an issue is repeatedly presented, courts, understandably, prefer that it at least be interesting. Unfortunately, the legal issues raised in these cases are rather dull. If Judge Wapner had to worry about personal jurisdiction, "The People's Court" would not be on television. A greater sin than dullness, however, is that the cases are often difficult to decide because the body of law that has developed is confusing and contradictory. Put these issues to a panel of judges and you're apt to get a split decision. In Lakeside Bridge and Steel Co. v. Mountain State Construction Co., 597 F.2d 596 (7th Cir. 1979), cert. den., 445 U.S. 907, 63 L. Ed. 2d 325, 100 S. Ct. 1087, for example, the court cited 22 cases in which lower courts had split 14-8 on personal jurisdiction questions involving purchasers and sellers from different states.

Unlike some of the cases discussed in Lakeside, the situation here is not terribly complex. An Indiana resident read an ad in an Indiana publication that offered a specific item (a 1963 Trinity propane anhydrous ammonia tanker transport) for sale. The ad stated that the seller was from Illinois. Mr. Indiana, in direct response to the ad, telephoned Mr. Illinois to discuss the tanker, and Mr. Illinois sent pictures and literature about the tanker to Mr. Indiana. Mr. Indiana traveled to Illinois, examined the tanker, decided to purchase it, did so, and transported it back to Indiana. The tanker soon proved to be defective (the fact that it ultimately blew up is not important on the jurisdictional issue), and this suit essentially for breach of warranty and rescission of the sales contract was born.

Now, one would think that in a rational system, especially one that seeks (or should seek) clarity and definiteness, experienced lawyers could simply and with conviction unanimously answer Mr. Indiana's question: "Can I sue the guy who sold me the tanker here in Indiana?" But alas we know, to our embarrassment, that the only honest answer the lawyer can probably give is a "Gee, I can't say for sure." See Wisconsin Elec. Mfg. Co., Inc. v. Pennant Products, 619 F.2d 676, 679 (7th Cir. 1980), construing the often-discussed Lakeside Bridge case, where the court observes:

"Ironically, the same court whose judgment was reversed in Lakeside dismissed this action in the reasonably belief that this case was close enough to Lakeside to be decided the same way. We appreciate and sympathize with the position of that court and other trial courts, state and federal, that must so frequently decide an amorphous federal constitutional question in order to determine whether service of process has been effective in an otherwise routine case. So long as long-arm jurisdiction reaches to the outermost limits due process will permit and so long as due process standards continue to be susceptible only of a case-by-case application, reasonably minds will differ in particular cases and the 'degree of predictability to the legal system' desired by the Supreme Court, World-Wide Volkswagen Corp., supra, [444 U.S. 286, 62 L. Ed. 2d 490], 100 S. Ct. at 567 will prove elusive. A strong case could be made for a set of concrete, objective standards, at least as a statutory matter, however arbitrary they might seem in individual cases, that would enable litigants to determine whether jurisdiction was present without taking the question to a reviewing court."

Recognizing the difficulty inherent in these cases, this court's recent decision in Madison Consulting Group v. The State of South Carolina, 752 F.2d 1193 (7th Cir. 1985), may prove to be helpful in resolving future problems as it clearly moves in the direction of establishing more objective and concrete standards to apply to personal jurisdiction issues. In Madison, the court exhaustively reviewed the mish-mash of personal jurisdiction-minimum contacts-due process cases spawned over the years. What the court in Madison underscored was the importance of looking to who initiated or solicited a business transaction in a suit arising out of the transaction. Here, that person is Schupbach. He did so by placing an ad in the "Illinois Prairie Farmer" that found its way into the "Indiana Prairie Farmer." After Hall read the ad, a chain of events started that culminated in the sale.

None of those events, however, occurred in Indiana, and thus, the question becomes is the ad enough? Judge Lee, in his meticulous district court decision, found that Schupbach did not "knowingly" cause the ad to appear in the Indiana publication. Subject to review under the not-clearly-erroneous standard, we accept that fact as true. Given the conclusion, then, that Schupbach did nothing to knowingly cause the ad to appear in Indiana, we conclude that he did not purposely avail himself of the privilege of doing business in Indiana and thus did not invoke the benefits and protections of that forum's laws. To make Schupbach susceptible to suit in Indiana we believe he would have had to knowingly solicit (in more than a general way) the sale there. Had he done so, his voluntary action would have been calculated to have an effect in Indiana. In such a ...

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