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by: Colin E. Flora
Just two months ago, we discussed Morrison v. Vasquez from the Court of Appeals of Indiana, which held that adoption of Indiana Code § 23–0.5–4–12 supplanted the Indiana Supreme Court’s interpretation from American Family Insurance Co. v. Ford Motor Co. of “principal office” as used for the purposes of establishing preferred venue under Indiana Trial Rule 75(A)(4). At that time, I said unequivocally that I thought the Court of Appeals got that decision wrong. Specifically, I wrote:
Do I agree with the court of appeals? I do not. Under 75(A)(4), venue is proper in “the county where either the principal office of a defendant organization is located or the office or agency of a defendant organization or individual[.]” That appears to say that the “principal office” is distinct from “the office . . . of a defendant organization.” But Section 12 renders “principal office” void. That is necessarily a statute that fixes a more stringent rule—it has cut out half of subdivision (4).
But I have an even more fundamental disagreement. I disagree in the assertion that American Family Insurance “was based on the corporation law adopted in 1986.” First, the meaning of a Trial Rule, like a statute or contract, is the meaning ascribed to it at the time it was enacted. To hold otherwise is to force amendment without going through the rigors of the amendment process. Trial Rule 75(A)(4) has not been changed since it was adopted. Second, American Family Insurance did not base its conclusion on the 1986 corporation law; it based its conclusion on the corporation law at the time Rule 75 was enacted. Had it done so upon 1986, there would not have been a corresponding term. That is, the court ruled that the new statute’s “registered agent” was the same as the old statutes “principal office” such that the location of the registered agent is the location of the “principal office.”
I think it odd that the court of appeals focused on the sentence in American Family Insurance that the 1986 business code “did not intend to change the venue rules for foreign corporations” without resolving the issue of how American Family Insurance would have been decided if the 1986 business code had so intended. The court appears to take it for granted that if there had been such an intent that it would have necessarily altered the venue requirements of Trial Rule 75. But that is definitely not a sure bet. The Indiana Supreme Court has reminded time and time again that it, not the General Assembly, has sole control over trial procedure in this state. As the Indiana Supreme Court recently wrote:
Our “rules of procedure prevail over any statute or statutory construction.” The General Assembly itself has recognized that we have sole authority over “practice and procedure in all the courts of Indiana,” and that “all laws in conflict with the supreme court's rules have no further force or effect.” Thus, in this conflict between Indiana Code § 35–38–4–2 and our Appellate Rule 9, the former must give way to the latter.
Accordingly, if Section 12 is purporting to overrule Trial Rule 75, then Section 12 must give way. And that looks to be exactly what Section 12 is purporting to do.
There are two more statutes we should also consider. The first is Indiana Code § 34–8–1–3, to which the Indiana Supreme Court referred in the excerpt above. It states, “The supreme court has authority to adopt, amend, and rescind rules of court that govern and control practice and procedure in all the courts of Indiana. These rules must be promulgated and take effect under the rules adopted by the supreme court, and thereafter all laws in conflict with the supreme court’s rules have no further force or effect.” That statute really does not add much, except to confirm the General Assembly’s agreement with the Indiana Supreme Court as to the court’s own power.
The second statute is one that has never been substantively addressed by an Indiana Appellate Court. Indiana Code § 34–8–2–1 reads, “The general assembly of the state of Indiana affirms the inherent power of the supreme court of Indiana to adopt, amend, and rescind rules of court affecting matters of procedure, and the general assembly reaffirms the power given to the supreme court to adopt, amend, and rescind rules of court, including the rules of court adopted in this chapter, as set forth by IC 34–8–1–1. However, the power of the supreme court to adopt, amend, and rescind rules of court does not preclude the creation, by statute, of alternatives to the change of venue.” The last sentence is the one of note. Even if the General Assembly could reserve any such control over procedures for change of venue, this is not a matter of change of venue, but of affixing venue in the first place.
But even were it to be deemed a matter impacting change of venue—arguably, because it would determine whether a change could occur, it might be a change of venue—the General Assembly cannot retain such control. That the Indiana Supreme Court controls trial procedures is not a matter of legislative grace. As the Indiana Supreme Court found more than a century ago—almost seven decades before the Indiana Trial Rules were adopted, “[The General Assembly] can not, under the Constitution, encroach on judicial domain by prescribing the manner and mode in which the courts shall discharge their judicial duties. The legislature has no more right to break down the rules prescribed by this court for conducting its official business than the court has to prescribe the mode and manner in which the legislature shall perform its legislative duties.”
I think Section 12 is an overreach by the General Assembly and cannot form a basis for changing course from American Family Insurance. Only a properly enacted amendment to Trial Rule 75(A)(4) can do what the Indiana Court of Appeals asserts Section 12 has done.
But, at that point, my critique was simply that: my critique. This week, however, my critique was validated by an entirely separate panel of the Court of Appeals in Indiana University Health South Indiana Physicians, Inc. v. Siddiqi. Writing for the unanimous court, Judge Altice first rejected the argument that American Family was confined to only foreign businesses and not Indiana companies:
Although American Family dealt with a foreign corporation, the Court’s analysis and interpretation of T.R. 75(A)(4) was not dependent on whether the corporation was foreign or domestic. In fact, the first sentence of the opinion states: “We hold that the term ‘principal office’ as used in subsections (4) and (10) of Trial Rule 75(A) refers to a domestic or foreign corporation’s registered office in Indiana.” The holding’s application to domestic corporations, as well as foreign, could not be more clear. Further, our court has applied the holding in the context of a domestic corporation.
Judge Altice then turned to whether the newly adopted Uniform Business Code’s rejection of registered agents as bases for venue supplanted the American Family interpretation of Trial Rule 75(A)(4). Using the exact same reasoning I contended in our prior discussion should have resulted in a different outcome in Morrison, the court concluded that the locus of the registered agent still controlled under Trial Rule 75(A)(4), having found that the statute and procedural rule were in direct conflict.
As to Morrison, the Siddiqi panel found it errantly decided:
We cannot agree with our colleagues’ determination regarding the effectiveness of the statute.
I.C. § 23-0.5-4-12 clearly conflicts with T.R. 75(A)(4) as the rule has been interpreted by our Supreme Court. As set forth above, in American Family, the Court was concerned with the meaning of “principal office” as it was understood at the time T.R. 75 was adopted in 1970. The Court determined that this phrase, as used in the rule, referred to “the place in Indiana where one serves the corporate registered agent.” In light of the 1986 amendments to our state’s corporation law, the Court determined that this place was now statutorily referred to as “registered office” rather than “principal office”. Despite the changed nomenclature, the Court stayed true to the original meaning of the term “principal office” in the rule.
Indiana corporation law has been substantially amended once again and in apparent recognition of the use of commercial registered agents, corporations are no longer required to maintain a “registered office” in the state, as previously mandated by I.C. § 23-1-24-1 (now repealed). Corporations, however, must “designate and maintain a registered agent in this state”. “Registered agent” is statutorily defined as “an agent of an entity which is authorized to receive service of any process, notice, or demand required or permitted by law to be served on the entity. The term includes a commercial registered agent and a noncommercial registered agent.” Thus, although the statutes have changed, a corporation still must have a registered agent in Indiana authorized to receive service of process. The address of the corporation’s registered agent more closely comports with the meaning of “principal office” as the term was understood in 1970 than the current statutory definitions of “principal office,” one of which was expressly rejected in American Family.
We reiterate that the Supreme Court has the “authority to adopt, amend, and rescind rules of court that govern and control practice and procedure in all the courts of Indiana.” Laws in conflict with rules promulgated by the Court “have no further force or effect.” Further, procedural rules adopted by the Court are regularly interpreted by the Court, and these cases also "take precedence over any conflicting statutes.” We hold that I.C. § 23-0.5-4-12 conflicts with T.R. 75(A)(4) as interpreted by the Indiana Supreme Court and that the statute is, therefore, a nullity.
American Family remains controlling law in Indiana. If the Indiana corporate community is dissatisfied with the Court’s interpretation of the rule, recourse lies with the Indiana Supreme Court Committee on Rules of Practice and Procedure, not the legislature.
So which case is correct? Of course, you know my answer. But it looks likely that we will have an answer from the Indiana Supreme Court before too long. Rehearing was denied in Morrison on October 22nd, meaning that there is still time for a petition to transfer to the Indiana Supreme Court. In light of the clear split between Morrison and Siddiqi, I expect the Indiana Supreme Court will grant transfer and issue a ruling to clarify the state of the law.
Join us again next time for further discussion of developments in the law.
Ind. Univ. Health S. Ind. Physicians, Inc. v. Siddiqi, ---N.E.3d---, No. 18A-CT-1299, 2018 Ind. App. LEXIS 414 (Ind. Ct. App. Nov. 7, 2018) (Altice, J.).
Morrison v. Vasquez, ---N.E.3d---, No. 18A-CT-376, 2018 Ind. App. LEXIS 305 (Ind. Ct. App. Aug. 28, 2018) (Brown, J.), reh’g denied.
Am. Family Ins. Co. v. Ford Motor Co., 857 N.E.2d 971 (Ind. 2006) (Boehm, J.).
State v. Holtsclaw, 977 N.E.2d 348, 350 (Ind. 2012) (Massa, J.).
Parkison v. Thompson, 164 Ind. 609, 626–27, 73 N.E. 109, 115 (1905) (Jordan, J.).
Holland v. Ind. Farm Bureau Ins., No. 18A-PL-792, 2018 Ind. App. LEXIS 303 (Ind. Ct. App. Aug. 28, 2018) (Baker, J.).
Colin E. Flora, Indiana Court of Appeals Rules Location of Registered Agent No Longer Basis for Preferred Venue, Hoosier Litig. Blog(Aug. 31, 2018).
*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.