[Cite as InFrasys, Inc. v. Bros. Pavement Prods., Corp., 2020-Ohio-1157.]




                             IN THE COURT OF APPEALS OF OHIO
                                 SIXTH APPELLATE DISTRICT
                                        ERIE COUNTY


InFrasys, Inc., et al.                                      Court of Appeals No. E-19-047

        Appellants                                          Trial Court No. 2018 CV 0332

v.

Brothers Pavement Products,
Corp., et al.                                               DECISION AND JUDGMENT

        Appellees                                           Decided: March 27, 2020

                                                  *****

        James L. Murray, Dennis E. Murray, Jr. and William H. Bartle,
        for appellants.

        James W. Hart and Mark P. Smith, for appellees.

                                                  *****

        ZMUDA, P.J.

        {¶ 1} This matter is before the court on appeal from the judgment of the Erie

County Court of Common Pleas, granting the motion to dismiss for lack of personal
jurisdiction of appellees Walsh & Hughes, Inc., dba VelveTop Products, Inc. and John B.

Walsh.

                          I. Facts and Procedural Background

       {¶ 2} Appellants, InFrasys, Inc. and ThorWorks Industries, Inc. are related

Minnesota corporations, with their principal place of business in Erie County, Ohio.

ThorWorks owns the SealMaster brand, and manufactures and sells seal coating products

and equipment to SealMaster system franchises. InFrasys oversees and supports the

franchise owners, and protects the SealMaster brand. InFrasys is the franchisor for the

SealMaster system.

       {¶ 3} Walsh & Hughes, Inc. dba VelveTop Products, Inc. (“VelveTop”) is a New

York corporation, with John B. Walsh as the president and owner. Brothers Pavement

Products, Corp. (Brothers) is a New York corporation doing business with VelveTop.

John K. Walsh and James K. Walsh are the owners/operators of Brothers. John B. Walsh

is the father of John K. and James K. Walsh.

       {¶ 4} The facts alleged by appellants regarding appellees, relative to the issue of

personal jurisdiction, are as follows.

       {¶ 5} In July 2007, John B. Walsh traveled to Ohio to negotiate VelveTop’s sale

of SealMaster products to the Long Island, New York area. John B. Walsh followed up

by phone to InFrasys in Ohio to continue negotiations, and responded to correspondence

from InFrasys on behalf of his sons and their company, Brothers. The franchise




2.
negotiations resulted in the Supplier Agreement between VelveTop and Brothers, and a

Franchise Agreement between InFrasys and Brothers.

       {¶ 6} On April 11, 2008, appellee VelveTop entered into a Supplier Agreement

with Brothers. The agreement concerned the production and supply of SealMaster

products to VelveTop, requiring VelveTop to cease manufacture of its sealers pursuant to

a contractual phase-in of purchasing SealMaster products from Brothers, with 100

percent of seal coat products purchased from Brothers within three years, and 100 percent

of asphalt emulsion sealer purchased from Brothers commencing the first day Brothers

began manufacture of the sealants. The Supplier Agreement also expressly referenced

the InFrasys franchise as follows:

              4. Notwithstanding the terms and conditions of this agreement, it is

       the understanding between the respective parties that all other terms and

       conditions which would apply to market conditions, such as pricing,

       supply, need, etc. will apply and that this agreement is entered into based

       on the familial relationship between the principals of the parties to this

       agreement and as an inducement for INFRAYSIS [sic], INC. to grant its

       franchise to BROTHERS PAVEMENT PRODUCTS CORP.

       (Emphasis added.)

       {¶ 7} InFrasys and Brothers executed the InFrasys, Inc. Franchise Agreement on

June 11, 2008. The franchise agreement recited a term of ten years, and granted Brothers

the right to a SealMaster sales and distribution business, with additional permission to




3.
manufacture pavement sealers marketed with the SealMaster brand. The franchise was

exclusive within Brother’s New York territory. Pursuant to the Franchise agreement,

InFrasys permitted Brother’s use of all SealMaster proprietary marks and copyrighted

materials, and shared the InFrasys confidential operations manual and other confidential

information, including processes, systems, and product specifications.

      {¶ 8} The Franchise agreement expressly referenced VelveTop in Paragraph

XVI.H. as follows:

             H. Special Provisions Regarding VelveTop Products, Inc. Anything

      in this Paragraph XVI. to the contrary notwithstanding, Franchisor,

      Franchisee and the individual shareholders of Franchisee (the “Individual

      Shareholders”) who are executing this Agreement (who are also deemed to

      be “Franchisees” by virtue of Paragraph XVI.B) hereby agree as follows:

             1. Franchisor acknowledges that John B. Walsh (“John Sr.”) is the

      father of the Individual Shareholders and that he owns and operates a

      business by the name of VelveTop Products, Inc. (“VelveTop”), which will

      be in direct competition with the franchised Business after commencement

      of the terms of this Agreement.

             2. Franchisor agrees that VelveTop and John Sr. may continue their

      current business under the terms of a Supplier Agreement with Franchisee,




4.
       a copy of which is attached as Exhibit C.1 The Supplier Agreement shall

       continue in force between the parties thereto through the term of this

       Agreement and may not be amended without prior consent of Franchisor.

       Franchisor further agrees that the Supplier Agreement may be assigned at

       the time of any sale of VelveTop. As referenced in the Supplier

       Agreement, Franchisor defines DECO SURFACING PRODUCTS to be

       any product in direct competition with the Franchisor’s SportMaster brand.

       {¶ 9} The Franchise Agreement contained a choice of law and venue clause,

requiring Ohio law and jurisdiction in Erie County, Ohio, with a waiver of personal

jurisdiction in Paragraph XXIX.B. Both John K. and James K. Walsh executed the

Agreement on behalf of Brothers.

       {¶ 10} On February 6, 2018, appellants terminated the franchise of Brothers

alleging numerous breaches of the Franchise Agreement, including the failure to enforce

the terms of the Supplier Agreement between VelveTop and Brothers. On June 14, 2018,

appellants filed a complaint in Erie County Common Pleas Court, alleging breach of the

Franchise Agreement and Supplier Agreement, and seeking monetary and injunctive

relief. As to VelveTop and John B. Walsh, appellants alleged tortious interference with a

business/contractual relationship, and claimed VelveTop failed to comply with the



1
 Exhibit A delineated the geographical territory for the franchise of Brothers, and Exhibit
B contained personal guaranties and assumptions of obligations by John K. and James K.
Walsh, each owning 50 percent in Brothers.




5.
phase-in periods in the Supplier Agreement and continued to manufacture its own sealers.

Appellants further alleged that Brothers sold “ingredients” for this unauthorized

manufacture rather than the finished product.

         {¶ 11} Appellants alleged that ThorWorks is an intended third-party beneficiary of

the Franchise Agreement and Supplier Agreement, and InFrasys is an intended third-

party beneficiary of the Supplier Agreement.

         {¶ 12} After extensions, discovery disputes, and limited discovery regarding the

issue of jurisdiction, VelveTop and John B. Walsh filed a motion to dismiss, alleging lack

of personal jurisdiction. InFrasys and ThorWorks opposed dismissal. They alleged John

B. Walsh controlled the negotiations for both VelveTop and his sons’ company, Brothers,

traveled to Ohio for initial negotiations, called InFrasys in Ohio for continued

negotiations, and sent his VelveTop trucks to ThorWorks in Sandusky, Ohio, to pick up

SealMaster materials and products.

         {¶ 13} While apparently acknowledging John B. Walsh’s participation in

negotiations and his visit to Sandusky in 2007, appellees argued that they never had an

intention to enter into any agreement with appellants, and lacked the necessary contact

with the forum state to permit an exercise of personal jurisdiction.

         {¶ 14} The trial court determined the motion based on the memoranda, affidavits

and deposition transcripts submitted in support.2 The trial court noted the applicable



2
    The record on appeal does not include the deposition transcripts.



6.
standard in ruling without hearing, that appellants need only make “a prima facie

showing of jurisdiction” to survive the motion to dismiss. In applying the standard under

R.C. 2307.382 and Civ.R. 4.3(A)(1), the trial court determined that appellants satisfied

the first prong of the Goldstein test, finding an exercise of personal jurisdiction proper

under the long-arm statute and applicable civil rule based on Goldstein v. Christianson,

70 Ohio St.3d 232, 235-236, 638 N.E.2d 541 (1994). As to the second prong, however,

in applying the three-part test for due process, the trial court found that VelveTop and

John B. Walsh had the required minimum contacts and caused injury within the forum

state. The court determined, however, that the exercise of personal jurisdiction would be

unreasonable and deprive VelveTop and John B. Walsh of due process.

       {¶ 15} As to this third factor of the due process analysis, the trial court found the

lack of evidence regarding frequency of travel to the ThorWorks site by VelveTop trucks

weighed against personal jurisdiction. The trial court, furthermore, noted that VelveTop

and John B. Walsh executed the Supplier Agreement two months prior to execution of

the Franchise Agreement, and made no mention of any connection between the two

agreements, as alleged by appellants.

       {¶ 16} The trial court granted dismissal of VelveTop and John B. Walsh for want

of personal jurisdiction, and entered a finding of no just cause for delay. In a subsequent

“Nunc Pro Tunc” entry, the trial court sua sponte revised its judgment, striking the final

appealable language from the dismissal judgment entry. After appellants moved to




7.
reinsert the final appealable language, the trial court did so, finding the dismissal

judgment entry to be final and appealable once more.

                                  II. Assignments of Error

         {¶ 17} InFrasys and ThorWorks now appeal the dismissal, asserting the following

assignments of error:

                1. The Trial Court Erred in Granting Defendants, Walsh & Hughes,

         Inc., dba VelveTop Products, Inc. and John B. Walsh’s Motion to Dismiss

         Plaintiffs’ Complaint for Lack of Personal Jurisdiction.

                2. The Trial Court Erred in Removing, Via its 8-13-2019 Nunc Pro

         Tunc Judgment Entry, the Civil Rule 54(B) Certification Included in its

         Initial Judgment Entry of 8-7-2019. The 8-7-2019 Judgment Entry

         Granting Defendants, Walsh & Hughes, Inc. and John B. Walsh’s Motion

         to Dismiss for Lack of Personal Jurisdiction Was and Remains a Final

         Appealable Order.

                                          III. Analysis

         {¶ 18} Because the parties dispute whether the trial court’s judgment entry of

dismissal constituted a final appealable order, we address appellants’ second assignment

of error first, as a threshold matter.3




3
    Appellees did not seek to dismiss this appeal for want of a final appealable order.




8.
                                      A. Final Order

       {¶ 19} In dismissing VelveTop and John B. Walsh as defendants for want of

personal jurisdiction, the trial court initially included Civ.R. 54(B) language in the

judgment entry, finding no just cause for delay. The Rule permits appeal of an otherwise

interlocutory order pertaining to only some of the parties, if the judgment determines the

action as to those parties and includes the determination that there is “no just reason for

delay.” See Civ.R. 54(B) (“* * * [T]he court may enter final judgment as to one or more

but fewer than all of the claims or parties only upon an express determination that there is

no just reason for delay.”).

       {¶ 20} Days later, the trial court ordered, sua sponte, the Civ.R. 54(B) language

stricken from the judgment of dismissal through a nunc pro tunc entry. As an initial

matter, we note that a nunc pro tunc entry is properly used to correct a judgment entry so

that it reflects the action actually taken by the court, and not to amend an entry to effect

substantive change. As the Ohio Supreme Court noted in State ex rel. Rogers v. Rankin,

154 Ohio St. 23, 26, 93 N.E.2d 281(1950):

              “It is elementary that courts possess inherent common-law power to

       enter judgments or orders nunc pro tunc in proper cases. The phrase

       meaning simply ‘now for then’ is accurately descriptive. The general

       purpose of such an entry is to record a prior but unrecorded act of the court.

       In other words, the power to make nunc pro tunc entries is restricted

       ordinarily to the subsequent recording of judicial action previously and




9.
       actually taken. It is a simple device by which a court may make its journal

       speak the truth.” (Citation omitted.)

The clerical purpose of a nunc pro tunc entry means a court may not amend a final

judgment, nunc pro tunc, to deprive the parties of “any rights which the previous order

had accorded * * * nor make that order any less final * * *.” Green v. Ken’s Flower

Shops, 6th Dist. Lucas No. L 94-088, 1994 WL 620732, *1-2 (Nov. 10, 1994), quoting

Huntington National Bank, v. Hebeka, 6th Dist. Lucas Nos. L 90-318 and L 90-360, 1992

WL 323945 (Jan. 4, 1991); Perfec. Stove Co. v. Sherber, 120 Ohio St. 445, 448, 166 N.E.

376 (1929).

       {¶ 21} Here, the trial court attempted to substitute a new and different action,

striking the original finding of “no just cause for delay.” There appears no record,

furthermore, supporting appellees’ argument that the trial court intended the judgment to

be merely interlocutory from the outset. The record, instead, demonstrates a judgment

containing Civ.R. 54(B) language, and an attempt to substantively change the judgment

through a nunc pro tunc entry, only to be amended once more in a third entry. The

change, accordingly, sought to reverse an action taking in the final judgment, with no

record to support a finding that the nunc pro tunc entry merely recorded an action already

taken. Therefore, the trial court could not convert its final appealable order by nunc pro

tunc entry.

       {¶ 22} The trial court, furthermore, had no jurisdiction to modify the final

appealable order sua sponte. Generally, a trial court lacks authority to vacate or modify a




10.
final judgment, sua sponte, without a written motion under Civ.R. 60(B) seeking relief

from judgment. (Citation omitted.) Midwest Environmental Controls, Inc. v. Houttekier,

6th Dist. Lucas No. L-04-1118, 2004-Ohio-5999, ¶ 3; see also Maxwell v. Univ. Hosps.

Health Sys., Inc., 8th Dist. Cuyahoga No. 104100, 2016-Ohio-7401, ¶ 5, citing Allstate

Ins. Co. v. Witta, 9th Dist. Summit No. 25738, 2011-Ohio-6068, ¶ 19, citing Pitts v. Ohio

Dept. of Transp., 67 Ohio St.2d 378, 380, 423 N.E.2d 1105 (1981) (“A trial court may

only relieve a party from judgment by the mechanisms provided by the Ohio Rules of

Civil Procedure.”). The trial court, therefore, erred in attempting to modify the final

judgment entered as to VelveTop and John B. Walsh without a proper written motion,

and its subsequent judgment entries were a nullity.4

       {¶ 23} Finally, we note that a dismissal for lack of personal jurisdiction has been

determined as appropriate for appeal where the judgment prevents a refiling in the trial

court. In Natl. City Commercial Capital Corp. v. AAAA At Your Serv., Inc., 114 Ohio

St.3d 82, 868 N.E.2d 663, 2007-Ohio-2942, ¶ 10, the Ohio Supreme Court considered

whether dismissal for lack of personal jurisdiction constituted a final appealable order. In

that case, the court noted that parties challenging the assertion of personal jurisdiction

may appeal the judgment. Id., citing Goldstein, 70 Ohio St.3d at 235, 638 N.E.2d 541,

citing State ex rel. Bradford v. Trumbull Cty. Court, 64 Ohio St.3d 502, 597 N.E.2d 116


4
  While no party argues the trial court lacked authority to enter a third judgment entry,
restoring the language of the first, the initial entry constituted a final appealable order,
and therefore any subsequent action, entered without a motion under rule permitting
modification, was without authority and a nullity.




11.
(1992) and State ex rel. Pearson v. Moore, 48 Ohio St.3d 37, 548 N.E.2d 945 (1990). A

party challenging the opposite result, therefore, should also have the ability to appeal. In

Natl. City, the dismissal prevented a refiling in the trial court, despite indicating it was

without prejudice. In that case, the Supreme Court held, “[i]t is not logical to allow a

party that believes a court wrongly asserted jurisdiction to appeal but to prevent a party

that believes a court wrongly did not assert jurisdiction from appealing.” Natl. City at

¶ 10.

        {¶ 24} In this case, appellants assert exclusive jurisdiction in Erie County, Ohio,

as to all defendants, pursuant to the Franchise Agreement, which purportedly

incorporates the Supplier Agreement. The trial court’s ruling, finding no personal

jurisdiction over appellees, prevents a refiling in that court. Therefore, considering the

trial court’s determination of a final appealable order under circumstances that prevented

refiling in the trial court, we find appellants’ second assignment of error well-taken, and

find this matter is properly before us on appeal.

                                  B. Personal Jurisdiction

        {¶ 25} In their first assignment of error, appellants argue the trial court erred in

finding it lacked personal jurisdiction over appellees. Appellants alleged personal

jurisdiction based on contacts with the forum state, and in the alternative, based on a

consent to jurisdiction within the Franchise Agreement.

        {¶ 26} As to appellants’ claim of consent to jurisdiction pursuant to the Franchise

Agreement, we note appellants rely—in part—on argument going to the merits of their




12.
third-party beneficiary claims. Appellants seek to enforce the forum selection clause of

the Franchise Agreement against VelveTop and John B. Walsh as non-signatories who

benefited from the arrangement.5 The issue before us is personal jurisdiction, and

because our determination of minimal contacts and due process is dispositive, we do not

reach the merits of appellants’ claims.

       {¶ 27} When a nonresident defendant seeks dismissal pursuant to Civ.R. 12(B)(2),

the plaintiff bears the burden of demonstrating proper jurisdiction. Ashton Park Apts.,

Ltd. v. Carlton-Naumann Constr., Inc., 6th Dist. Lucas No. L-08-1395, 2009-Ohio-6335,

¶ 12, citing Jurko v. Jobs Europe Agency, 43 Ohio App.2d 79, 334 N.E.2d 478 (8th

Dist.1974). “Personal jurisdiction is a question of law that appellate courts review de

novo.” Kauffman Racing Equip., LLC v. Roberts, 126 Ohio St.3d 81, 2010-Ohio-2551,

930 N.E.2d 784, ¶ 27.




5
  Appellants rely on Villanueva v. Barcroft, 822 F. Supp.2d 726 (N.D.Ohio 2011), where
a non-signatory sought to enforce a forum selection clause against a signatory party. The
facts in the present case are distinguishable, and more aligned with the facts in the Third
Circuit Court of Appeals case of E.I. DuPont de Nemours and Co. v. Rhone Poulenc
Fiber and Resin Interm., S.A.S., 269 F.3d 187 (3d Cir.2001). In E.I. DuPont, the Third
Circuit noted that a non-signatory could be bound to a forum selection clause under
contract principles governing third-party beneficiaries to the underlying agreement.
Citing Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 202-204 (3d
Cir.1983), overruled on other grounds by Lauro Lines v. Chasser, 490 U.S. 495, 109
S.Ct. 1976, 104 L.Ed.2d 548 (1989).




13.
       {¶ 28} Where the trial court determines the matter without an evidentiary hearing,6

appellants need only make a prima facie showing of jurisdiction. Kauffman at ¶ 27,

citing Fallang v. Hickey, 40 Ohio St.3d 106, 107, 532 N.E.2d 117 (1988). A prima facie

showing of personal jurisdiction requires “sufficient evidence to allow reasonable minds

to conclude that personal jurisdiction exists over the defendant.” Figley v. Ivex

Protective Packaging, Inc., 2016-Ohio-3501, 70 N.E.3d 12 (3d Dist.), quoting Parshall v.

PAID, Inc., 10th Dist. Franklin No. 07AP-1019, 2008-Ohio-3171, ¶ 9, citing Goldstein v.

Christiansen, 70 Ohio St.3d 232, 236, 638 N.E.2d 541 (1984) (additional citation

omitted.). We “view allegations in the pleadings and the documentary evidence in a light

most favorable” to appellants and resolve “all reasonable competing inferences” in

appellants’ favor in making the determination. Kauffman at ¶ 27, citing Goldstein at 236.

       {¶ 29} Courts apply a two-step analysis in determining the proper exercise of

personal jurisdiction over a nonresident defendant, with the second prong requiring

consideration of three factors. This analysis requires determination of “(1) whether the

long-arm statute and the applicable rule of civil procedure confer jurisdiction and, if so,



6
 Unlike a Civ.R. 12(B)(6) motion, which limits review to the pleading, a court may
consider outside evidence in determining its own jurisdiction, and may also hold an
evidentiary hearing. See, e.g., Jurko v. Jobs Europe Agency, 43 Ohio App.2d 79, 85, 334
N.E.2d 478, 482 (8th Dist.1975) (“When a court considers a challenge to its jurisdiction
over a defendant-a defense which may require the taking of extensive evidence-the court
may hear the matter on affidavits, deposition, interrogatories, or receive oral testimony,
as matters of jurisdiction are very often not apparent on the face of the summons or
complaint.”).




14.
(2) whether the exercise of jurisdiction would deprive the nonresident defendant of the

right to due process of law under the Fourteenth Amendment to the United States

Constitution.” Kauffman at ¶ 28, citing U.S. Sprint Comm. Co. Ltd. Ptnshp. v. Mr. K’s

Foods, Inc., 68 Ohio St.3d 181, 183-184, 624 N.E.2d 1048 (1994). Here, the trial court

found the first prong satisfied, and the first two factors under the second prong met, but

ultimately determined that exercise of personal jurisdiction offended due process under

the final factor of the due process analysis. For the reasons that follow, we disagree with

the trial court’s conclusion.

                       1. Jurisdiction Pursuant to Statute or Rule

       {¶ 30} Ohio’s long-arm statute, R.C. 2307.382 enumerates conduct that will

permit a court’s exercise of personal jurisdiction, including:

              (A)(1) Transacting any business in this state;

              ***

              (A)(4) Causing tortious injury in this state by an act or omission

       outside this state if he regularly does or solicits business, or engages in any

       other persistent course of conduct, or derives substantial revenue from

       goods used or consumed or services rendered in this state;

              ***

              (A)(6) Causing tortious injury in this state to any person by an act

       outside this state committed with the purpose of injuring persons, when he




15.
       might reasonably have expected that some person would be injured thereby

       in this state[.]

Civ.R. 4.3(A), likewise, permits service of process on nonresidents who have “caused an

event to occur out of which the claim that is the subject of the complaint arose” based on

“(1) Transacting any business in this state[.]” Civ.R. 4.3(A)(1).

       {¶ 31} The “transacting any business” standard is “a broad statement of

jurisdiction[.]” U.S. Sprint Communications Co. Ltd. Partnership v. Mr. K’s Foods, Inc.,

68 Ohio St.3d 181, 185, 624 N.E.2d 1048 (1994), citing R.C. 2307.382(A)(1).

“Transact,” means “to prosecute negotiations; carry on business; to have dealings * * *.

The word embraces in its meaning the carrying on or prosecution of business negotiations

but it is a broader term than the word ‘contract’ and may involve business negotiations

which have been either wholly or partly brought to a conclusion * * *.” Kentucky Oaks

Mall Co. v. Mitchell’s Formal Wear, Inc., 53 Ohio St.3d 73, 75, 559 N.E.2d 477 (1990),

quoting Black’s Law Dictionary, 1341 (5 Ed.1979).

       {¶ 32} Appellants referenced documentary evidence to support their allegations,

which are as follows. John B. Walsh initiated the contact with the forum state by

traveling to Sandusky Ohio in 2007 to inquire about VelveTop becoming a SealMaster

franchise. John B. Walsh followed up this contact with phone calls, leading negotiations

in order to facilitate a Brothers’ franchise, as an alternative to VelveTop obtaining the

franchise. John B. Walsh executed the Supplier Agreement with Brothers on behalf of

VelveTop, and that agreement expressly stated its purpose was to induce InFrasys to




16.
grant the franchise to his sons, and their company, Brothers. John B. Walsh also sent

VelveTop trucks to Ohio on numerous occasions each year, to pick up materials and

goods from ThorWorks. Additionally, after InFrasys and ThorWorks raised concerns of

a potential breach of the Supplier Agreement, John B. Walsh attended a meeting in

Sandusky regarding the issue, and John B. Walsh spoke on behalf of his sons and

Brothers. Based on these allegations, reasonable minds could conclude that appellants

satisfied their burden of establishing a prima facie showing of personal jurisdiction over

appellees, in conformity with R.C. 2307.384 and Civ.R. 4.3.

                                     2. Due Process

        {¶ 33} Once we determine that appellants satisfied both the Ohio long-arm statute

and rule, we must consider whether the exercise of personal jurisdiction comports with

due process. Although the long-arm statute permits exercise of personal jurisdiction, an

Ohio court may only do so if the exercise of jurisdiction would not violate constitutional

rights to due process. Kauffman, 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, at

¶ 45.

        {¶ 34} “[D]ue process is satisfied if the defendant has ‘minimum contacts’ with

the forum state such that the maintenance of the suit does not offend ‘traditional notions

of fair play and substantial justice.’” Kauffman at ¶ 45, quoting Internatl. Shoe Co. v.

Washington, 325 U.S. 310, 316, 66 S.Ct.154, 90 L.Ed.95 (1945) (additional citation

omitted.). Where a defendant “purposefully avails” themself “of the privilege of

conducting activities within the forum state,” the minimum-contacts requirement is




17.
deemed to be met. Kauffman at ¶ 45, quoting Hanson v. Denckla, 357 U.S. 235, 253, 78

S.Ct. 1228, 2 L.Ed.2d 1283 (1968).

       {¶ 35} We apply a three-part test to determine whether a defendant has the

minimum contacts necessary for exercise of personal jurisdiction and necessary to satisfy

due process. Henderson v. SMC Productions, Inc., 6th Dist. Erie No. E-18-003, 2019-

Ohio-5275, ¶ 64. To demonstrate the necessary contacts, appellants must demonstrate

that (1) appellees “purposefully availed” themselves of the privilege of acting in Ohio or

causing a consequence in Ohio; (2) the cause of action must arise from appellees’

activities in Ohio, and (3) the appellees’ acts or consequences must have a substantial

enough connection with Ohio to make exercise of jurisdiction reasonable. Henderson

at ¶ 64, citing Ohlman Farm & Greenhouse, Inc. v. Kanakry, 6th Dist. Lucas No.

L-13-1264, 2014-Ohio-4731, ¶ 26; see also Kauffman at ¶ 48-49, quoting Southern

Machine Company v. Mohasco Ind., Inc., 401 F.2d 374, 381 (6th Cir.1968); Bird v.

Parsons, 289 F.3d 865, 874 (6th Cir.1989).

                                a. Purposeful Availment

       {¶ 36} To demonstrate “purposeful availment,” appellants must show that

appellees’ contact proximately resulted from appellees’ own conduct that created a

“substantial connection” with Ohio. Kauffman at ¶ 51, citing Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (additional citation

omitted.). A substantial connection is required to ensure “that a defendant will not be




18.
haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’

contacts.” Kauffman at ¶ 51, citing Burger King at 474-475.

       {¶ 37} Here, appellants made a prima facie showing as to the first factor of the

test. Appellants presented evidence, demonstrating VelveTop, through John B. Walsh,

first sought an Ohio-based SealMaster franchise opportunity for VelveTop. He later

negotiated the franchise on behalf of Brothers, and as inducement for InFrasys to grant

the franchise to Brothers, VelveTop and Brothers entered into a Supplier Agreement.

VelveTop benefited from the combined deal by gaining access to the SealMaster catalog

and brand, pursuant to the terms of the Supplier Agreement. Negotiations took place in

Ohio, and VelveTop traveled to Ohio three or four times each year to pick up product

from ThorWorks. After InFrasys determined that breach of the Supplier Agreement and

Franchise Agreement had occurred, resulting in diminished royalties under the Franchise

Agreement, John B. Walsh traveled to Ohio to discuss the breach of the agreements.

Considering the allegations, with supporting evidence as to the factor used in determining

prima facie support for personal jurisdiction, we find appellants satisfied the first factor.

                           b. Harm Caused in the Forum State

       {¶ 38} As to the second part of the test, appellants must show that the cause of

action arose, in Ohio, as a result of appellees’ activities. “If a defendant’s contacts with

the forum state are related to the operative facts of the controversy, then an action will be

deemed to have arisen from those contacts.” Kauffman at ¶ 70, quoting CompuServe, Inc.

v. Patterson, 89 F.3d 1257, 1267 (6th Cir.1996). Only a “relation” is necessary, as the




19.
test “does not require that the cause of action formally ‘arise from’ defendant’s contacts

with the forum; rather, this criterion requires only ‘that the cause of action, of whatever

type, have a substantial connection with the defendant’s in-state activities.’” Kauffman at

¶ 70, quoting Third Natl. Bank in Nashville v. WEDGE Group, Inc., 882 F.2d 1087, 1091

(6th Cir.1989), quoting S. Machine Co., 401 F.2d at 384, fn. 27.

       {¶ 39} Here, appellants alleged that the conduct of VelveTop and John B. Walsh,

in failing to honor the Supplier Agreement, caused damages to their business in Erie

County, Ohio. Specifically, appellants alleged that VelveTop failed to purchase

SealMaster finished products and equipment from Brothers, depriving InFrasys of

royalties, fees, and income due under the Franchise Agreement, and depriving

ThorWorks of revenue and profits from the sale of these products. Additionally, as to

VelveTop and John B. Walsh, appellants alleged a claim for interference with the

business relationship with Brothers by refusing to honor the Supplier Agreement.

Appellants supported their allegations with affidavit testimony, describing violations of

the Supplier Agreement and John B. Walsh’s admission of violations. Considering the

allegations, with supporting evidence as to the factor used in determining prima facie

support for personal jurisdiction, we find appellants satisfied the second factor.

                              c. Inference of Reasonableness

       {¶ 40} Once a plaintiff satisfies the first two parts of the test by demonstrating a

prima facie case, “‘then an inference arises that this third factor is also present.’”

Kauffman at ¶ 71, quoting CompuServe, Inc., 89 F.3d at 1268, citing Am. Greetings Corp.




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v. Cohn, 839 F.2d 1164, 1170 (6th Cir.1988). This inference applies in all but “the

unusual case.” Kauffman at ¶ 71, quoting Am. Greetings, 839 F.2d at 1170, quoting First

Natl. Bank of Louisville v. J.W. Brewer Tire Co., 680 F.2d 1123, 1126 (6th Cir.1982).

       {¶ 41} The trial court determined appellants satisfied the first two factors, but not

the third, without any discussion of the inference pertaining to the third test. Moreover,

the trial court noted the “sporadic” visits to Ohio and lack of evidence on how frequent

VelveTop picked up materials each year, as well as the fact that VelveTop and John B.

Walsh were not signatories to the Franchise Agreement. Essentially, the trial court

addressed the third factor as a stand-alone requirement, lacking any benefit of an

inference arising from satisfaction of the first two prongs. The trial court elevated this

third factor by apparently requiring appellants to produce evidence of the frequency of

VelveTop’s presence in Ohio, a most stringent standard for proving the third factor

considering the applicable authority.

       {¶ 42} Contrary to the trial court’s interpretation, the final inquiry regarding due

process is whether the claim has enough connection to Ohio to make exercise of

jurisdiction over appellees reasonable. Resolution of this test, considering the applicable

inference, “involves merely ferreting out the unusual cases where [Ohio’s interest in

resolving the dispute] cannot be found.” S. Machine Co., 401 F.2d at 384. The Ohio

General Assembly provides guidance in determining Ohio’s interest, as outlined in

Ohio’s long-arm statute, which provides for jurisdiction over those who transact business

in this state or cause tortious injury within this state. R.C. 2307.382(A)(1), (4), and (6).




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       {¶ 43} Exercise of personal jurisdiction does not offend due process in this

instance. “A State generally has a ‘manifest interest’ in providing its residents with a

convenient forum for redressing injuries inflicted by out-of-state actors.” (Citations

omitted.) Burger King, 471 U.S. at 473, 105 S.Ct. 2174, 85 L.Ed.2d 528. In cases where

an out-of-state actor has purposefully acted and derived a benefit from their activities,

moreover, “it may well be unfair to allow them to escape having to account in other

States for consequences that arise proximately from such activities[.]” Burger King at

474, citing Kulko v. California Superior Court, 436 U.S. 84, 96, 98 S.Ct. 1690, 56

L.Ed.2d 132 (1978).

       {¶ 44} Finally, the fact that contact may have been “sporadic” is not

determinative. “If it creates a ‘substantial connection’ to the forum state, a single

purposeful contact is enough to satisfy the requirements of due process.” (Citations

omitted.) Fallang v. Hickey, 40 Ohio St.3d 106, 108, 532 N.E.2d 117 (1988). In this

case, appellants claim injury to corporations located in Ohio, caused by appellees’

actions, and arising from appellees’ contacts with the forum state. Accordingly, exercise

of personal jurisdiction over appellees is reasonable, and the trial court erred in

determining otherwise. We find appellants’ first assignment of error well-taken.




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                                     IV. Conclusion

       {¶ 45} Having found the exercise of personal jurisdiction over appellees VelveTop

and John B. Walsh proper, we reverse the judgment of the Erie County Common Pleas

Court and remand the matter for further proceedings against all defendants. Appellees

are ordered to pay the costs of this appeal pursuant to App.R. 24.


                                                                        Judgment reversed
                                                                           and remanded.




       A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.




Mark L. Pietrykowski, J.                       _______________________________
                                                           JUDGE
Thomas J. Osowik, J.
                                               _______________________________
Gene A. Zmuda, P.J.                                        JUDGE
CONCUR.
                                               _______________________________
                                                           JUDGE


           This decision is subject to further editing by the Supreme Court of
      Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
           version are advised to visit the Ohio Supreme Court’s web site at:
                    http://www.supremecourt.ohio.gov/ROD/docs/.




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